##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K





þ Annual Report Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934


for the fiscal year ended December 31, 2005


OR


o Transition Report
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934


for the transition period
from  to


Commission file number: 000-51719


LINN ENERGY, LLC


(Exact name of registrant as specified in its charter)


|                                         |  |                                     
|---------------------------------------- |  | ------------------------------------
|Delaware                                 |  | 65-1177591                          
|(State of organization)                  |  | (I.R.S. Employer Identification No.)
|                                        
|650 Washington Road                      |  |                                     
|8th Floor                                |  |                                     
|Pittsburgh, PA                           |  | 15228                               
|(Address of principal executive offices) |  | (Zip Code)                          

(412) 440-1400


(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


Title of Class





Units Representing Limited Liability Company Interests


o þ


o þ


o þ


S-K 10-K 10-K. þ


12b-2


o o þ


12b-2 o þ




Documents Incorporated By Reference: None










---



##### 












TABLE OF CONTENTS


|           |  |                                                                                                                     |  |      |    | 
|---------- |  | ------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|           |  |                                                                                                                     |  | Page |   
|           |  |                                                                                                                     |  |      |   
|Part I    
|Item 1.    |  | Business                                                                                                            |  |      | 5  | 
|Item 1A.   |  | Risk Factors                                                                                                        |  |      | 18 | 
|Item 1B.   |  | Unresolved Staff Comments                                                                                           |  |      | 30 | 
|Item 2.    |  | Properties                                                                                                          |  |      | 31 | 
|Item 3.    |  | Legal Proceedings                                                                                                   |  |      | 32 | 
|Item 4.    |  | Submission of Matters to a Vote of Security
    Holders                                                             |  |      | 32 | 
|Part II   
|Item 5.    |  | Market for Registrants Common Equity,
    Related Unitholder Matters and Issuer Purchases of Equity
    Securities |  |      | 33 | 
|Item 6.    |  | Selected Financial Data                                                                                             |  |      | 34 | 
|Item 7.    |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                           |  |      | 39 | 
|Item 7A.   |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                      |  |      | 56 | 
|Item 8.    |  | Financial Statements and Supplementary
    Data                                                                     |  |      | 57 | 
|Item 9.    |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure                            |  |      | 57 | 
|Item 9A.   |  | Controls and Procedures                                                                                             |  |      | 57 | 
|Item 9B.   |  | Other Information                                                                                                   |  |      | 59 | 
|Part III  
|Item 10.   |  | Directors and Executive Officers of the
    Registrant                                                              |  |      | 59 | 
|Item 11.   |  | Executive Compensation                                                                                              |  |      | 63 | 
|Item 12.   |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Unitholder Matters                   |  |      | 66 | 
|Item 13.   |  | Certain Relationships and Related
    Transactions                                                                  |  |      | 70 | 
|Item 14.   |  | Principal Accountant Fees and Services                                                                              |  |      | 71 | 
|Part IV   
|Item 15.   |  | Exhibits and Financial Statement
    Schedules                                                                      |  |      | 71 | 
|Signatures |  |                                                                                                                     |  |      | 74 | 

i



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##### 






PART I


10-K,


GLOSSARY OF TERMS


Bbl.


Bcf.


Bcfe.


Btu.


Development well.


Dth.


Developed acres.


Dry hole well.


Field.


Gross acres gross wells.


MBbls.


Mcf.


Mcfe.


MMBbls.


MMBtu.


MMcf.


MMcfe.


MMcfe/d.


MMMBtu.


Net acres net wells.


NYMEX.


Oil.


Productive well.


Proved developed reserves.


1



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##### 





Proved reserves. i.e.


Proved undeveloped drilling location.


Proved undeveloped reserves PUDs.


Recompletion.


Reservoir.


Standardized Measure.


Successful well.


Undeveloped acreage.


Working interest.


Workover.


2



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##### 



Restatement Overview




Business Combinations




|                                  |                                          |                   |            |            |                   |   |                   |            |   |   |            |            |   |   |             |          |  
|--------------------------------- | ---------------------------------------- | ----------------- | ---------- | ---------- | ----------------- | - | ----------------- | ---------- | - | - | ---------- | ---------- | - | - | ----------- | -------- | -
|                                  |                                          | Period from       |            |            |                   |   | Nine months ended |           
|                                  |                                          | March 14, 2003    |            |            |                   |   | September 30,     |           
|                                  |                                          | (inception) to    |            |            | Year ended        |   |                   |            |  
|                                  |                                          | December 31, 2003 |            |            | December 31, 2004 |   |                   | 2004       |   |   | 2005       |           
|                                  |                                          |                   |            |            |                   |   |                   |            |   |   |            |           
|Net (loss) as previously reported |                                          | $                 | (1,334,700 | )          |                   | $ | (3,977,788        | )          |   | $ | (8,357,298 | )          |   | $ | (62,855,997 | )       
|Adjustments:                      |                                          |                   |            |            |                   |   |                   |            |   |   |            |            |   |   |             |         
|                                  | Acquisition date for purchase accounting |                   |            | (1,066,229 | )                 |   |                   | (1,855,735 | ) |   |            | (1,457,712 | ) |   |             | (187,546 | )
|                                  | Lease acquisition costs                  |                   |            | 46,120     |                   |   |                   | 367,526    |   |   |            | 290,928    |   |   |             | 102,602  |  
|                                  | Development drilling costs               |                   |            |           |                   |   |                   | 128,253    |   |   |            | 128,253    |   |   |             |         |  
|                                  | Depreciation, depletion and amortization |                   |            | 409,673    |                   |   |                   | 92,987     |   |   |            | (71,465    | ) |   |             | (299,055 | )
|                                  | Operating receivables                    |                   |            | 257,131    |                   |   |                   | 428,951    |   |   |            | 183,877    |   |   |             | (24,783  | )
|                                  |                                          |                   |            |            |                   |   |                   |            |   |   |            |           
|Restated net (loss)               |                                          | $                 | (1,688,005 | )          |                   | $ | (4,815,806        | )          |   | $ | (9,283,417 | )          |   | $ | (63,264,779 | )       
|                                  |                                          |                   |            |            |                   |   |                   |            |   |   |            |           



|                                       |                                          |                   |       |        |                   |   |                   |        |   |   |       |        |   |   |        |      |  
|-------------------------------------- | ---------------------------------------- | ----------------- | ----- | ------ | ----------------- | - | ----------------- | ------ | - | - | ----- | ------ | - | - | ------ | ---- | -
|                                       |                                          | Period from       |       |        |                   |   | Nine months ended |       
|                                       |                                          | March 14, 2003    |       |        |                   |   | September 30,     |       
|                                       |                                          | (inception) to    |       |        | Year ended        |   |                   |        |  
|                                       |                                          | December 31, 2003 |       |        | December 31, 2004 |   |                   | 2004   |   |   | 2005  |       
|                                       |                                          |                   |       |        |                   |   |                   |        |   |   |       |       
|                                       |                                          | (In thousands)    |      
|Adjusted EBITDA as previously reported |                                          | $                 | 1,777 |        |                   | $ | 12,228            |        |   | $ | 7,981 |        |   | $ | 10,164 |     
|Adjustments:                           |                                          |                   |       |        |                   |   |                   |        |   |   |       |        |   |   |        |     
|                                       | Acquisition date for purchase accounting |                   |       | (1,066 | )                 |   |                   | (1,855 | ) |   |       | (1,458 | ) |   |        | (188 | )
|                                       | Lease acquisition costs                  |                   |       | 46     |                   |   |                   | 368    |   |   |       | 291    |   |   |        | 103  |  
|                                       | Development drilling costs               |                   |       |       |                   |   |                   | 128    |   |   |       | 128    |   |   |        |     |  
|                                       | Operating receivables                    |                   |       | 257    |                   |   |                   | 429    |   |   |       | 184    |   |   |        | (25  | )
|                                       |                                          |                   |       |        |                   |   |                   |        |   |   |       |       
|Restated Adjusted EBITDA               |                                          | $                 | 1,014 |        |                   | $ | 11,298            |        |   | $ | 7,126 |        |   | $ | 10,054 |     
|                                       |                                          |                   |       |        |                   |   |                   |        |   |   |       |       



3



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##### 



History of Corrections




Business
Combinations


Financial Accounting and Reporting by
Oil and Gas Producing Companies






8-K




4



---



##### 








|        |         
|------- | --------
|Item 1. | Business

Overview




reserves-to






10-K


5



---



##### 



Acquisition History




|         |  |                                 |  |       |  |                            |  |               |       | 
|-------- |  | ------------------------------- |  | ----- |  | -------------------------- |  | ------------- | ----- | 
|         |  |                                 |  |       |  |                            |  | Restated      |      
|         |  |                                 |  |       |  |                            |  | Purchase      |      
|Date     |  | Seller                          |  | Wells |  | Location                   |  | Price         |      
|         |  |                                 |  |       |  |                            |  |               |      
|         |  |                                 |  |       |  |                            |  | (in millions) |      
|May 2003 |  | Emax Oil Company                |  | 34    |  | West Virginia              |  | $             | 3.2   | 
|Aug 2003 |  | Lenape Resources, Inc.          |  | 61    |  | New York                   |  |               | 2.2   | 
|Sep 2003 |  | Cabot Oil & Gas Corporation     |  | 50    |  | Pennsylvania               |  |               | 15.8  | 
|Oct 2003 |  | Waco Oil & Gas Company          |  | 353   |  | West Virginia and Virginia |  |               | 31.5  | 
|May 2004 |  | Mountain V Oil & Gas, Inc.      |  | 251   |  | Pennsylvania               |  |               | 12.5  | 
|Sep 2004 |  | Pentex Energy, Inc.             |  | 447   |  | Pennsylvania               |  |               | 15.1  | 
|Apr 2005 |  | Columbia Natural Resources, LLC |  | 38    |  | West Virginia and Virginia |  |               | 4.4   | 
|Aug 2005 |  | GasSearch Corporation           |  | 130   |  | West Virginia              |  |               | 5.4   | 
|Oct 2005 |  | Exploration Partners, LLC       |  | 550   |  | West Virginia and Virginia |  |               | 111.4 | 
|         |  |                                 |  |       |  |                            |  |               |      
|         |  | Total                           |  | 1,914 |  |                            |  | $             | 201.5 | 
|         |  |                                 |  |       |  |                            |  |               |      

Business Strategy






| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | Executing low risk, low cost development drilling;                                     
|
| |  | Focusing on acquisitions that increase cash available for
    distribution;            
|
| |  | Creating additional value post-acquisition;                                            
|
| |  | Maximizing the value and stability of our cash flows through
    operating control; and
|
| |  | Reducing commodity price risk through derivatives.                                     

Drilling






6



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##### 





Appalachian Basin










Natural Gas Prices






7



---



##### 







|                   |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |       | 
|------------------ | ------------------------ | --------- | - | ----- | --------- |  | - | --------- |  |  | --------- | ------ |  |  | - | ----- | 
|                   |                          | Year 2006 |   |       | Year 2007 |  |   | Year 2008 |  |  | Year 2009 |       
|                   |                          |           |   |       |           |  |   |           |  |  |           |       
|Fixed Price Swaps: |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |      
|                   | Hedged Volume (MMMBtu)   |           |   | 7,412 |           |  |   | 7,168     |  |  |           | 8,464  |  |  |   | 6,205 | 
|                   | Average Price ($/ MMBtu) |           | $ | 9.26  |           |  | $ | 8.64      |  |  | $         | 8.23   |  |  | $ | 7.56  | 
|Puts:              |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |      
|                   | Hedged Volume (MMMBtu)   |           |   | 730   |           |  |   | 2,336     |  |  |           | 2,013  |  |  |   |      | 
|                   | Average Price ($/ MMBtu) |           | $ | 8.83  |           |  | $ | 9.11      |  |  | $         | 9.50   |  |  | $ |      | 
|Total:             |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |      
|                   | Hedged Volume (MMMBtu)   |           |   | 8,142 |           |  |   | 9,504     |  |  |           | 10,477 |  |  |   | 6,205 | 
|                   | Average Price ($/ MMBtu) |           | $ | 9.22  |           |  | $ | 8.75      |  |  | $         | 8.47   |  |  | $ | 7.56  | 

Natural Gas and Oil Data




| |                
| | ---------------
| | Proved Reserves



|                                                        |                                         |                    |       |       |      |   |       |       |       |   |       |       |       | 
|------------------------------------------------------- | --------------------------------------- | ------------------ | ----- | ----- | ---- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                                        |                                         | As of December 31, |      
|                                                        |                                         |                    |      
|                                                        |                                         | 2003               |       |       | 2004 |   |       | 2005  |      
|                                                        |                                         |                    |       |       |      |   |       |       |      
|Reserve Data:                                           |                                         |                    |       |       |      |   |       |       |       |   |       |      
|Estimated net proved reserves:                          |                                         |                    |       |       |      |   |       |       |       |   |       |      
|                                                        | Natural gas (Bcf)                       |                    |       | 68.9  |      |   |       | 118.9 |       |   |       | 191.9 |      
|                                                        | Oil (MMBbls)                            |                    |       | 0.2   |      |   |       | 0.1   |       |   |       | 0.2   |      
|                                                        |                                         | Total (Bcfe)       |       |       | 69.8 |   |       |       | 119.8 |   |       |       | 193.2 | 
|Proved developed (Bcfe)                                 |                                         |                    | 41.8  |       |      |   | 74.4  |       |       |   | 125.2 |      
|Proved undeveloped (Bcfe)                               |                                         |                    | 28.0  |       |      |   | 45.4  |       |       |   | 68.0  |      
|Proved developed reserves as % of total proved reserves |                                         |                    | 59.9  | %     |      |   | 62.1  | %     |       |   | 64.8  | %    
|Standardized Measure (in millions)(1)                   |                                         | $                  | 126.3 |       |      | $ | 215.0 |       |       | $ | 552.1 |      
|Representative Natural Gas and Oil Prices:              |                                         |                    |       |       |      |   |       |       |       |   |       |      
|                                                        | Natural gas  NYMEX Henry Hub per MMBtu |                    | $     | 5.97  |      |   | $     | 6.18  |       |   | $     | 10.08 |      
|                                                        | Oil  NYMEX WTI per Bbl                 |                    |       | 32.76 |      |   |       | 43.36 |       |   |       | 57.98 |      






|    |                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Does not give effect to derivative transactions. For a
    description of our derivative transactions, please read
    Item 7, Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Cash
    Flow from Operations in this Annual Report on
    Form 10-K.





8



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##### 







| |                             
| | ----------------------------
| | Production and Price History



|                             |                                                   |                |   |       |              |  |   |       |  |  |   |        | 
|---------------------------- | ------------------------------------------------- | -------------- | - | ----- | ------------ |  | - | ----- |  |  | - | ------ | 
|                             |                                                   | Period from    |   |       |              |  |  
|                             |                                                   | March 14, 2003 |   |       |             
|                             |                                                   | (inception)    |   |       | Year Ended   | 
|                             |                                                   | through        |   |       | December 31, | 
|                             |                                                   | December 31,   |   |       |              | 
|                             |                                                   | 2003(1)        |   |       | 2004         |  |   |      
|                             |                                                   | (Restated)     |   |       | (Restated)   |  |   | 2005  | 
|                             |                                                   |                |   |       |              |  |   |       | 
|Net Production:              |                                                   |                |   |       |              |  |   |       |  |  |   |       
|                             | Total production (MMcfe)                          |                |   | 492   |              |  |   | 3,112 |  |  |   | 4,839  | 
|                             | Average daily production (Mcfe/d)                 |                |   | 2,299 |              |  |   | 8,526 |  |  |   | 13,258 | 
|Average Sales Prices:        |                                                   |                |   |       |              |  |   |       |  |  |   |       
|                             | Weighted average realized natural gas price (Mcf) |                | $ | 5.26  |              |  | $ | 5.73  |  |  | $ | 6.92   | 
|                             | Weighted average realized price (Mcfe)            |                |   | 5.25  |              |  |   | 5.74  |  |  |   | 6.97   | 
|Average Unit Costs per Mcfe: |                                                   |                |   |       |              |  |   |       |  |  |   |       
|                             | Operating expenses                                |                | $ | 1.62  |              |  | $ | 1.53  |  |  | $ | 1.52   | 
|                             | General and administrative expenses               |                |   | 1.59  |              |  |   | 0.48  |  |  |   | 0.69   | 
|                             | Depreciation, depletion and amortization          |                |   | 1.14  |              |  |   | 1.17  |  |  |   | 1.51   | 






|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In the period ended December 31, 2003, production commenced
    on May 30, 2003 following the purchase of natural gas
    properties from Emax Oil Company.



| |                 
| | ----------------
| | Productive Wells



|             |  |             |       |  |     |  |       | 
|------------ |  | ----------- | ----- |  | --- |  | ----- | 
|             |  | Natural Gas |      
|             |  | Wells       |      
|             |  |             |      
|             |  | Gross       |       |  | Net | 
|             |  |             |       |  |     | 
|Operated     |  |             | 1,922 |  |     |  | 1,518 | 
|Non-operated |  |             | 192   |  |     |  | 56    | 
|             |  |             |       |  |     | 
|Total        |  |             | 2,114 |  |     |  | 1,574 | 
|             |  |             |       |  |     | 

9



---



##### 





| |                                  
| | ---------------------------------
| | Developed and Undeveloped Acreage



|             |  |                   |         |             |         |  |         |               |  |  |        |  |  |       |        |  |     |  |         |  |  |  |         | 
|------------ |  | ----------------- | ------- | ----------- | ------- |  | ------- | ------------- |  |  | ------ |  |  | ----- | ------ |  | --- |  | ------- |  |  |  | ------- | 
|             |  |                   |         | Undeveloped |         |  |        
|             |  | Developed Acreage |         |             | Acreage |  |         | Total Acreage | 
|             |  |                   |         |             |         |  |         |               | 
|             |  | Gross             |         |             | Net     |  |         | Gross         |  |  | Net    |  |  | Gross |        |  | Net | 
|             |  |                   |         |             |         |  |         |               |  |  |        |  |  |       |        |  |     | 
|Operated     |  |                   | 92,783  |             |         |  | 92,578  |               |  |  | 39,175 |  |  |       | 37,358 |  |     |  | 131,958 |  |  |  | 129,936 | 
|Non-operated |  |                   | 96,500  |             |         |  | 15,750  |               |  |  |       |  |  |       |       |  |     |  | 96,500  |  |  |  | 15,750  | 
|             |  |                   |         |             |         |  |         |               |  |  |        |  |  |       |        |  |     | 
|Total        |  |                   | 189,283 |             |         |  | 108,328 |               |  |  | 39,175 |  |  |       | 37,358 |  |     |  | 228,458 |  |  |  | 145,686 | 
|             |  |                   |         |             |         |  |         |               |  |  |        |  |  |       |        |  |     | 



| |                  
| | -----------------
| | Drilling Activity





|                       |            |              |  |    |      |  |  |     |     | 
|---------------------- | ---------- | ------------ |  | -- | ---- |  |  | --- | --- | 
|                       |            | Year Ended   | 
|                       |            | December 31, | 
|                       |            |              | 
|                       |            | 2004         |  |    | 2005 | 
|                       |            |              |  |    |      | 
|Gross wells:           |            |              |  |    |      |  |  |    
|                       | Productive |              |  | 90 |      |  |  | 110 |    
|                       | Dry        |              |  |   |      |  |  |    |    
|                       |            |              |  |    |      | 
|                       |            | Total        |  |    | 90   |  |  |     | 110 | 
|                       |            |              |  |    |      | 
|Net Development wells: |            |              |  |    |      |  |  |    
|                       | Productive |              |  | 82 |      |  |  | 105 |    
|                       | Dry        |              |  |   |      |  |  |    |    
|                       |            |              |  |    |      | 
|                       |            | Total        |  |    | 82   |  |  |     | 105 | 
|                       |            |              |  |    |      | 
|Net Exploratory wells: |            |              |  |    |      |  |  |    
|                       | Productive |              |  |   |      |  |  |    |    
|                       | Dry        |              |  |   |      |  |  |    |    
|                       |            |              |  |    |      | 
|                       |            | Total        |  |    |     |  |  |     |    | 
|                       |            |              |  |    |      | 

Natural Gas Gathering Activities




10



---



##### 









| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | realize faster connection of newly drilled wells to the existing
    system;                           
|
| |  | control pipeline operating pressures and capacity to maximize
    our production;                      
|
| |  | control compression costs and fuel use;                                                                
|
| |  | maintain system integrity;                                                                             
|
| |  | control the monthly nominations on the receiving pipelines to
    prevent imbalances and penalties; and
|
| |  | closely track sales volumes and receipts to ensure all
    production values are realized.             

Natural Gas Gathering for Others




Purchase for Resale




Operations




| |        
| | -------
| | General

day-to




| |                           
| | --------------------------
| | Natural Gas and Oil Leases



11



---



##### 











| |                    
| | -------------------
| | Principal Customers





| |                    
| | -------------------
| | Derivative Activity

10-K.




| |            
| | -----------
| | Competition







12



---



##### 





| |                    
| | -------------------
| | Title to Properties





| |                            
| | ---------------------------
| | Seasonal Nature of Business





| |                                     
| | ------------------------------------
| | Environmental Matters and Regulation



General.




| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | require the acquisition of various permits before drilling
    commences;                                                                                                                          
|
| |  | require the installation of expensive pollution control
    equipment;                                                                                                                             
|
| |  | restrict the types, quantities and concentration of various
    substances that can be released into the environment in
    connection with drilling and production activities;                    
|
| |  | limit or prohibit drilling activities on lands lying within
    wilderness, wetlands and other protected areas;                                                                                    
|
| |  | require remedial measures to prevent pollution from former
    operations, such as pit closure and plugging of abandoned wells;                                                                    
|
| |  | impose substantial liabilities for pollution resulting from our
    operations; and                                                                                                                
|
| |  | with respect to operations affecting federal lands or leases,
    require preparation of a Resource Management Plan, an
    Environmental Assessment, and/or an Environmental Impact
    Statement.



13



---



##### 



clean-up




National Environmental Policy Act.


Resource Conservation and Recovery Act.


up-to


Comprehensive Environmental Response, Compensation and
Liability Act.




14



---



##### 





Federal Water Pollution Control Act.


Clean Air Act.


Other Laws and Regulation.




| |                                                         
| | --------------------------------------------------------
| | Other Regulation of the Natural Gas and Oil
    Industry





15



---



##### 





Drilling and Production.




| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | the location of wells;                                                         
|
| |  | the method of drilling and casing wells;                                       
|
| |  | the surface use and restoration of properties upon which wells
    are drilled;
|
| |  | the plugging and abandoning of wells; and                                      
|
| |  | notice to surface owners and other third parties.                              



Natural Gas Transportation and Pricing.




State Regulation.




16



---



##### 





| |          
| | ---------
| | Employees



Available Information


http://www.linnenergy.com 10-K, 10-Q, 8-K, http://www.sec.gov


Forward-Looking Statements


10-K




| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | business strategy;                                                                                  
|
| |  | financial strategy;                                                                                 
|
| |  | drilling locations;                                                                                 
|
| |  | natural gas and oil reserves;                                                                       
|
| |  | realized natural gas and oil prices;                                                                
|
| |  | production volumes;                                                                                 
|
| |  | lease operating expenses, general and administrative expenses
    and finding and development costs;
|
| |  | future operating results; and                                                                       
|
| |  | plans, objectives, expectations and intentions.                                                     

10-K, 10-K.


10-K 10-K


17



---



##### 



10-K.







|         |             
|-------- | ------------
|Item 1A. | Risk Factors

Risks Related to Our Business


We may not have sufficient cash flow from operations to pay
the quarterly distribution at the current distribution level and
future distributions to our unitholders may fluctuate from
quarter to quarter.






| |   |                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------
| |  | the amount of natural gas we produce;                                                                                       
|
| |  | the price at which we are able to sell our natural gas
    production;                                                      
|
| |  | the level of our operating costs;                                                                                           
|
| |  | the level of our interest expense, which depends on the amount
    of our indebtedness and the interest payable thereon; and
|
| |  | the level of our capital expenditures.                                                                                      





| |   |                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------
| |  | our ability to make working capital borrowings under our credit
    facility to pay distributions;           
|
| |  | the costs of acquisitions, if any;                                                                           
|
| |  | fluctuations in our working capital needs;                                                                   
|
| |  | timing and collectibility of receivables;                                                                    
|
| |  | restrictions on distributions contained in our credit facility;                                              
|
| |  | prevailing economic conditions; and                                                                          
|
| |  | the amount of cash reserves established by our Board of
    Directors for the proper conduct of our business.





18



---



##### 



We may incur substantial additional debt in the future to
enable us to pursue our business plan and to pay distributions
in the amount of the initial quarterly distribution.




If commodity prices decline significantly for a prolonged
period, our cash flow from operations will decline, and we may
have to lower our distribution or may not be able to pay
distributions at all.






| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | the domestic and foreign supply of and demand for natural gas;                                                                                 
|
| |  | the price and level of foreign imports;                                                                                                        
|
| |  | the level of consumer product demand;                                                                                                          
|
| |  | weather conditions;                                                                                                                            
|
| |  | overall domestic and global economic conditions;                                                                                               
|
| |  | political and economic conditions in natural gas and oil
    producing countries, including those in the Middle East and
    South America;    
|
| |  | the ability of members of the Organization of Petroleum
    Exporting Countries to agree to and maintain oil price and
    production controls;
|
| |  | the impact of the U.S. dollar exchange rates on natural gas
    and oil prices;                                                                
|
| |  | technological advances affecting energy consumption;                                                                                           
|
| |  | domestic and foreign governmental regulations and taxation;                                                                                    
|
| |  | the impact of energy conservation efforts;                                                                                                     
|
| |  | the proximity and capacity of natural gas pipelines and other
    transportation facilities; and                                               
|
| |  | the price and availability of alternative fuels.                                                                                               





19



---



##### 



Unless we replace our reserves, our reserves and production
will decline, which would adversely affect our cash flow from
operations and our ability to make distributions to our
unitholders.




Our estimated reserves are based on many assumptions that may
prove to be inaccurate. Any material inaccuracies in these
reserve estimates or underlying assumptions will materially
affect the quantities and present value of our reserves.








| |   |                                                 
| | - | ------------------------------------------------
| |  | actual prices we receive for natural gas;       
|
| |  | the amount and timing of actual production;     
|
| |  | supply of and demand for natural gas; and       
|
| |  | changes in governmental regulations or taxation.



20



---



##### 



Our development operations require substantial capital
expenditures, which will reduce our cash available for
distribution. We may be unable to obtain needed capital or
financing on satisfactory terms, which could lead to a decline
in our reserves.






| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | our proved reserves;                                                    
|
| |  | the level of natural gas we are able to produce from existing
    wells;
|
| |  | the prices at which we are able to sell our natural gas; and            
|
| |  | our ability to acquire, locate and produce new reserves.                



Our business depends on gathering and transportation
facilities owned by others. Any limitation in the availability
of those facilities would interfere with our ability to market
the natural gas we produce and could reduce our revenues and
cash available for distribution.




We depend on certain key customers for sales of our natural
gas. To the extent these and other customers reduce the volumes
of natural gas they purchase from us, our revenues and cash
available for distribution could decline.




21



---



##### 



Shortages of drilling rigs, equipment and crews could delay
our operations and reduce our cash available for
distribution.




Because we handle natural gas and other petroleum products,
we may incur significant costs and liabilities in the future
resulting from a failure to comply with new or existing
environmental regulations or an accidental release of hazardous
substances into the environment.






| |   |                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the federal Clean Air Act and comparable state laws and
    regulations that impose obligations related to air emissions;                                                                                                                                                                                                                                       
|
| |  | the federal Clean Water Act and comparable state laws and
    regulations that impose obligations related to discharges of
    pollutants into regulated bodies of water;                                                                                                                                                                                       
|
| |  | the federal Resource Conservation and Recovery Act, and
    comparable state laws that impose requirements for the handling
    and disposal of waste from our facilities; and                                                                                                                                                                                  
|
| |  | the Comprehensive Environmental Response, Compensation and
    Liability Act of 1980, also known as Superfund, and
    comparable state laws that regulate the cleanup of hazardous
    substances that may have been released at properties currently
    or previously owned or operated by us or at locations to which
    we have sent waste for disposal.



10-K.


22



---



##### 



If we do not make acquisitions on economically acceptable
terms, our future growth and ability to increase distributions
will be limited.






| |   |                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------
| |  | unable to identify attractive acquisition candidates or
    negotiate acceptable purchase contracts with them;
|
| |  | unable to obtain financing for these acquisitions on
    economically acceptable terms; or                    
|
| |  | outbid by competitors.                                                                                        







| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | mistaken assumptions about revenues and costs, including
    synergies;      
|
| |  | an inability to integrate successfully the businesses we acquire;            
|
| |  | the assumption of unknown liabilities;                                       
|
| |  | limitations on rights to indemnity from the seller;                          
|
| |  | the diversion of managements attention from other business
    concerns; and
|
| |  | customer or key employee losses at the acquired businesses.                  



We have incurred losses from operations since our inception
and may continue to do so in the future, which may impact our
ability to pay distributions to our unitholders.




Locations that we decide to drill may not yield natural gas
in commercially viable quantities.




Many of our leases are in areas that have been partially
depleted or drained by offset wells.






23



---



##### 





Drilling for and producing natural gas are high risk
activities with many uncertainties that could adversely affect
our financial condition or results of operations and, as a
result, our ability to pay distributions to our unitholders.






| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | the high cost, shortages or delivery delays of equipment and
    services;             
|
| |  | unexpected operational events;                                                         
|
| |  | adverse weather conditions, particularly seasonal weather
    conditions in the spring;
|
| |  | facility or equipment malfunctions;                                                    
|
| |  | title problems;                                                                        
|
| |  | pipeline ruptures or spills;                                                           
|
| |  | compliance with environmental and other governmental
    requirements;                 
|
| |  | unusual or unexpected geological formations;                                           
|
| |  | loss of drilling fluid circulation;                                                    
|
| |  | formations with abnormal pressures;                                                    
|
| |  | fires;                                                                                 
|
| |  | blowouts, craterings and explosions; and                                               
|
| |  | uncontrollable flows of natural gas or well fluids.                                    





24



---



##### 



Our credit facility has substantial restrictions and
financial covenants and we may have difficulty obtaining
additional credit, which could adversely affect our operations
and our ability to pay distributions to our unitholders.




2 3


Properties that we buy may not produce as projected and we
may be unable to determine reserve potential, identify
liabilities associated with the properties or obtain protection
from sellers against such liabilities.




Our hedging activities could result in financial losses or
could reduce our income, which may adversely affect our ability
to pay distributions to our unitholders.




We depend on our President and Chief Executive Officer who
would be difficult to replace.




25



---



##### 



If we fail to develop or maintain an effective system of
internal controls, we may not be able to accurately report our
financial results or prevent fraud. As a result, current and
potential unitholders could lose confidence in our financial
reporting, which would harm our business and the trading price
of our units.




We may be unable to compete effectively with larger
companies, which may adversely affect our ability to generate
sufficient revenue to allow us to pay distributions to our
unitholders.




We are subject to complex federal, state, local and other
laws and regulations that could adversely affect the cost,
manner or feasibility of doing business.






26



---



##### 



10-K


We face possible delisting from The Nasdaq Stock Market,
which could result in a limited trading market for our units,
and could negatively affect the price of our units.


10-K 10-Q.


We may face risks related to the recent restatement of our
financial statements.




Risks Related to Our Structure


Our management and Quantum Energy Partners own, in the
aggregate, a controlling interest in us, with management and
Quantum Energy Partners owning approximately 16.2% and 36.4%,
respectively, of our units.




Each of management or Quantum Energy Partners, or both, may
have conflicts of interest with us. Our limited liability
company agreement limits the remedies available to you in the
event you have a claim relating to conflicts of interest.




27



---



##### 







| |   |                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our limited liability company agreement gives our Board of
    Directors broad discretion in establishing cash reserves for the
    proper conduct of our business, which will affect the amount of
    cash available for distribution. For example, our management
    will use its reasonable discretion to establish and maintain
    cash reserves sufficient to fund our drilling program;
|
| |  | our management team determines the timing and extent of our
    drilling program and related capital expenditures, asset
    purchases and sales, borrowings, issuances of additional
    membership interests and reserve adjustments, all of which will
    affect the amount of cash that we distribute to our
    unitholders; and                                                          
|
| |  | Quantum Energy Partners and other affiliates of our directors
    are not prohibited from investing or engaging in other
    businesses or activities that compete with us.                                                                                                                                                                                                                     

We may issue additional units without unitholder approval,
which would dilute your existing ownership interests.








| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | an individual unitholders proportionate ownership interest
    in us may decrease;     
|
| |  | the amount of cash distributed on each unit may decrease;                               
|
| |  | the relative voting strength of each previously outstanding unit
    may be reduced; and
|
| |  | the market price of the units may decline.                                              

The market price of our units could be volatile for a number
of factors, many of which are beyond our control.






| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | changes in securities analysts recommendations and their
    estimates of our financial performance;                                                                                                                           
|
| |  | the publics reaction to our press releases, announcements
    and our filings with the SEC;                                                                                                                                    
|
| |  | fluctuations in broader securities market prices and volumes,
    particularly among securities of natural gas and oil companies
    and securities of publicly-traded limited partnerships and
    limited liability companies;
|
| |  | changes in market valuations of similar companies;                                                                                                                                                                              
|
| |  | departures of key personnel;                                                                                                                                                                                                    
|
| |  | commencement of or involvement in litigation;                                                                                                                                                                                   
|
| |  | variations in our quarterly results of operations or those of
    other natural gas and oil companies;                                                                                                                          
|
| |  | variations in the amount of our quarterly cash distributions;                                                                                                                                                                   
|
| |  | future issuances and sales of our units; and                                                                                                                                                                                    
|
| |  | changes in general conditions in the U.S. economy,
    financial markets or the natural gas and oil industry.                                                                                                                   



28



---



##### 



Quantum Energy Partners may sell units in the future, which
could reduce the market price of our outstanding units.




Tax Risks to Unitholders


Our tax treatment depends on our status as a partnership for
federal income tax purposes, as well as our not being subject to
entity-level taxation by individual states. If the IRS were to
treat us as a corporation for federal income tax purposes or we
were to become subject to entity-level taxation for state tax
purposes, taxes paid, if any, would reduce the amount of cash
available for distribution.








You may be required to pay taxes on income from us even if
you do not receive any cash distributions from us.




A successful IRS contest of the federal income tax positions
we take may adversely affect the market for our units, and the
costs of any contest will reduce cash available for
distribution.




29



---



##### 



We will treat each purchaser of our units as having the same
tax benefits without regard to the units purchased. The IRS may
challenge this treatment, which could adversely affect the value
of the units.




You may be subject to state and local taxes and return filing
requirements.




Tax gain or loss on the disposition of our units could be
more or less than expected because prior distributions in excess
of allocations of income will decrease your tax basis in your
units.




We will be considered to have terminated for tax purposes due
to a sale or exchange of 50% or more of our interests within a
twelve-month period.









|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments



30



---



##### 








|        |           
|------- | ----------
|Item 2. | Properties






31



---



##### 



10-K.


10-K




| |        
| | -------
| | Offices








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Power Gas Marketing & Transmission, Inc. v.
Cabot Oil & Gas Corporation and Linn Energy









|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



32



---



##### 






PART II







|        |                                                                                                                
|------- | ---------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Unitholder Matters and Issuer Purchases of Equity Securities







| |                
| | ---------------
| | (a) the sum of:



| |                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) all cash and cash equivalents of Linn Energy on hand at
    the end of that quarter; and                                                                                                                                         
|
| | (ii) all additional cash and cash equivalents of Linn
    Energy on hand on the date of determination of available cash
    for that quarter resulting from working capital borrowings made
    subsequent to the end of the quarter;



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | (b) less the amount of any cash reserves established by the
    Board of Directors to:



| |                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) provide for the proper conduct of the business of Linn
    Energy (including reserves for future capital expenditures
    including drilling and acquisitions and for anticipated future
    credit needs);                                                       
|
| | (ii) comply with applicable law or any loan agreement,
    security agreement, mortgage, debt instrument or other agreement
    or obligation to which Linn Energy or any of its subsidiaries is
    a party or by which it is bound or its assets are
    subject; or
|
| | (iii) provide funds for distribution with respect to any
    one or more of the next four quarters.                                                                                                                                                                   



10-K


Use of Securities Act Registration Statement Proceeds


S-1 333-125501)




33



---



##### 










|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA






10-K.


period-to




|                              |                                                    |                |   |             |             |                |   |              |       |  |              |            |       |  |            |   |        |      |  |   |        |       |  |   |         |         |  
|----------------------------- | -------------------------------------------------- | -------------- | - | ----------- | ----------- | -------------- | - | ------------ | ----- |  | ------------ | ---------- | ----- |  | ---------- | - | ------ | ---- |  | - | ------ | ----- |  | - | ------- | ------- | -
|                              |                                                    | Predecessor    |   |             |             | Successor      |  
|                              |                                                    |                |   |             |             |                |  
|                              |                                                    |                |   |             | Period from |                |   |             
|                              |                                                    |                |   |             | March 14,   |                |   |             
|                              |                                                    |                |   | Period from |             |                |   | 2003         |       |  |             
|                              |                                                    |                |   | January 1,  |             |                |   | (inception)  |       |  | Year Ended   |           
|                              |                                                    |                |   | 2003        |             |                |   | through      |       |  | December 31, |           
|                              |                                                    |                |   | through     |             |                |   | December 31, |       |  |              |           
|                              |                                                    |                |   | October 31, |             |                |   | 2003         |       |  | 2004         |            |       | 
|                              |                                                    | 2001           |   |             | 2002        |                |   | 2003         |       |  |              | (Restated) |       |  | (Restated) |   |        | 2005 | 
|                              |                                                    |                |   |             |             |                |   |              |       |  |              |            |       |  |            |   |        |      | 
|                              |                                                    | (unaudited)    |   |             |             |                |   |              |       |  |              |            |       | 
|                              |                                                    | (In thousands) |   |             |             | (In thousands) |  
|Statement of Operations Data: |                                                    |                |   |             |             |                |   |              |       |  |              |            |       |  |            |   |        |      |  |   |        |       |  |   |        
|Revenues:                     |                                                    |                |   |             |             |                |   |              |       |  |              |            |       |  |            |   |        |      |  |   |        |       |  |   |        
|                              | Natural gas and oil sales                          |                | $ | 5,382       |             |                | $ | 3,779        |       |  | $            | 4,705      |       |  |            | $ | 2,379  |      |  | $ | 19,502 |       |  | $ | 44,645  |        
|                              | Realized gain (loss) on natural gas derivatives(1) |                |   |            |             |                |   |             |       |  |              |           |       |  |            |   | 163    |      |  |   | (2,239 | )     |  |   | (51,417 | )      
|                              | Unrealized (loss) on natural gas derivatives(2)    |                |   |            |             |                |   |             |       |  |              |           |       |  |            |   | (1,600 | )    |  |   | (8,765 | )     |  |   | (24,776 | )      
|                              | Natural gas marketing revenue                      |                |   |            |             |                |   |             |       |  |              |           |       |  |            |   |       |      |  |   | 520    |       |  |   | 4,722   |        
|                              | Other revenue                                      |                |   | 1,488       |             |                |   | 698          |       |  |              | 788        |       |  |            |   | 4      |      |  |   | 160    |       |  |   | 345     |        
|                              |                                                    |                |   |             |             |                |   |              |       |  |              |            |       |  |            |   |        |      | 
|                              |                                                    | Total revenues |   |             | 6,870       |                |   |              | 4,477 |  |              |            | 5,493 |  |            |   |        | 946  |  |   |        | 9,178 |  |   |         | (26,481 | )
|                              |                                                    |                |   |             |             |                |   |              |       |  |              |            |       |  |            |   |        |      | 

34



---



##### 



|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |   |        |        |        |   |         |         |        |  
|---------------------------------------------------------------------------- | ---------------------------------------- | --------------------------------- | --- | ----------- | ----------- | -------------- | ------ | ------------ | ----- | - | ------------ | ---------- | ----- | - | ---------- | ------ | ------ | ----- | - | ------ | ------ | ------ | - | ------- | ------- | ------ | -
|                                                                             |                                          | Predecessor                       |     |             |             | Successor      |       
|                                                                             |                                          |                                   |     |             |             |                |       
|                                                                             |                                          |                                   |     |             | Period from |                |        |             
|                                                                             |                                          |                                   |     |             | March 14,   |                |        |             
|                                                                             |                                          |                                   |     | Period from |             |                |        | 2003         |       |   |             
|                                                                             |                                          |                                   |     | January 1,  |             |                |        | (inception)  |       |   | Year Ended   |           
|                                                                             |                                          |                                   |     | 2003        |             |                |        | through      |       |   | December 31, |           
|                                                                             |                                          |                                   |     | through     |             |                |        | December 31, |       |   |              |           
|                                                                             |                                          |                                   |     | October 31, |             |                |        | 2003         |       |   | 2004         |            |       |  
|                                                                             |                                          | 2001                              |     |             | 2002        |                |        | 2003         |       |   |              | (Restated) |       |   | (Restated) |        |        | 2005  |  
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  
|                                                                             |                                          | (unaudited)                       |     |             |             |                |        |              |       |   |              |            |       |  
|                                                                             |                                          | (In thousands)                    |     |             |             | (In thousands) |       
|Expenses:                                                                    |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |   |        |        |        |   |         |        
|                                                                             | Operating expenses                       |                                   |     | 1,702       |             |                |        | 2,426        |       |   |              | 2,204      |       |   |            |        | 798    |       |   |        | 4,756  |        |   |         | 7,356   |       
|                                                                             | Natural gas marketing expense            |                                   |     |            |             |                |        |             |       |   |              |           |       |   |            |        |       |       |   |        | 482    |        |   |         | 4,401   |       
|                                                                             | General and administrative expenses      |                                   |     | 3,186       |             |                |        | 1,047        |       |   |              | 870        |       |   |            |        | 783    |       |   |        | 1,488  |        |   |         | 3,332   |       
|                                                                             | Depreciation, depletion and amortization |                                   |     | 1,152       |             |                |        | 1,494        |       |   |              | 1,185      |       |   |            |        | 562    |       |   |        | 3,656  |        |   |         | 7,294   |       
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  
|                                                                             |                                          | Total expenses                    |     |             | 6,040       |                |        |              | 4,967 |   |              |            | 4,259 |   |            |        |        | 2,143 |   |        |        | 10,382 |   |         |         | 22,383 |  
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  
|Other Income and (Expenses):                                                 |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |   |        |        |        |   |         |        
|                                                                             | Interest income                          |                                   |     |            |             |                |        |             |       |   |              |           |       |   |            |        | 34     |       |   |        | 7      |        |   |         | 47      |       
|                                                                             | Interest and financing expenses(3)       |                                   |     | (390        | )           |                |        | (352         | )     |   |              | (237       | )     |   |            |        | (517   | )     |   |        | (3,530 | )      |   |         | (7,040  | )     
|                                                                             | Loss on equity investment                |                                   |     | (57         | )           |                |        | (145         | )     |   |              | (63        | )     |   |            |        | (3     | )     |   |        | (56    | )      |   |         | (17     | )     
|                                                                             | Write-off of deferred financing fees     |                                   |     |            |             |                |        |             |       |   |              |           |       |   |            |        |       |       |   |        |       |        |   |         | (364    | )     
|                                                                             | Gain (loss) on sale of assets            |                                   |     | (111        | )           |                |        | (63          | )     |   |              | 49         |       |   |            |        | (5     | )     |   |        | (33    | )      |   |         | (39     | )     
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  
|                                                                             |                                          | Total other income and (expenses) |     |             | (558        | )              |        |              | (560  | ) |              |            | (251  | ) |            |        |        | (491  | ) |        |        | (3,612 | ) |         |         | (7,413 | )
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  
|                                                                             | Income (loss) before income taxes        |                                   |     | 272         |             |                |        | (1,050       | )     |   |              | 983        |       |   |            |        | (1,688 | )     |   |        | (4,816 | )      |   |         | (56,277 | )     
|                                                                             | Income tax (provision)(4)                |                                   |     |            |             |                |        |             |       |   |              |           |       |   |            |        |       |       |   |        |       |        |   |         | (74     | )     
|Income (loss) before cumulative effect of change in accounting
    principle |                                          |                                   | 272 |             |             |                | (1,050 | )            |       |   | 983          |            |       |   |            | (1,688 | )      |       |   | (4,816 | )      |        |   | (56,351 | )      
|Cumulative effect of change in accounting principle                          |                                          |                                   |    |             |             |                |       |              |       |   | (757         | )          |       |   |            |       |        |       |   |       |        |        |   |        |        
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  
|Net income (loss)                                                            |                                          | $                                 | 272 |             |             | $              | (1,050 | )            |       | $ | 226          |            |       |   | $          | (1,688 | )      |       | $ | (4,816 | )      |        | $ | (56,351 | )      
|                                                                             |                                          |                                   |     |             |             |                |        |              |       |   |              |            |       |   |            |        |        |       |  






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During 2005, we cancelled (before their original settlement
    date) a portion of
    out-of-the-money
    natural gas hedges and realized a loss of $38.3 million. We
    subsequently hedged similar volumes at higher prices. The
    remaining $13.1 million of the $51.4 million realized
    loss relates to losses on derivative positions settled in 2005
    at scheduled maturity dates that were not related to the
    cancellation of
    out-of-the-money
    natural gas hedges.                                          
|   
|(2) | The natural gas swaps were not specifically designated as hedges
    under SFAS No. 133, even though they reduce our
    exposure to changes in natural gas prices. Therefore, the mark
    to market of these instruments was recorded in our current
    earnings. Further, these amounts represent non-cash charges.                                                                                                                                                                                                                   
|   
|(3) | Includes the unrealized gain (loss) on interest rate swaps that
    were not specifically designated as hedges under
    SFAS No. 133, even though they reduce our exposure to
    changes in interest rates. Therefore, the mark to market of
    these instruments was recorded in our current earnings. Further,
    these amounts represent non-cash charges.                                                                                                                                                                         
|   
|(4) | Linn Operating, LLC (predecessor to Linn Operating, Inc.) was
    not subject to federal income tax before converting to a
    subchapter
    C-corporation on
    June 1, 2005. Prior to the conversion and the formation of
    Mid Atlantic Well Service, Inc. as a wholly owned subchapter
    C-corporation on October 12, 2005, there was no tax
    provision included in our consolidated financial statements
    because all of our taxable income or loss was included in the
    income tax returns of the individual members.

35



---



##### 



|                                                    |  |                |        |                 |             |                |        |                     |  |   |              |            |  |  |            |         |   |      |   |         |   |  |   |          |  
|--------------------------------------------------- |  | -------------- | ------ | --------------- | ----------- | -------------- | ------ | ------------------- |  | - | ------------ | ---------- |  |  | ---------- | ------- | - | ---- | - | ------- | - |  | - | -------- | -
|                                                    |  | Predecessor    |        |                 |             | Successor      |       
|                                                    |  |                |        |                 |             |                |       
|                                                    |  |                |        |                 | Period from |                |        | Year Ended          | 
|                                                    |  |                |        | Period from     |             |                |        | March 14, 2003      |  |   | December 31, |           
|                                                    |  |                |        | January 1, 2003 |             |                |        | (inception) through |  |   |              |           
|                                                    |  |                |        | through         |             |                |        | December 31, 2003   |  |   | 2004         |            |  | 
|                                                    |  | 2001           |        |                 | 2002        |                |        | October 31, 2003    |  |   |              | (Restated) |  |  | (Restated) |         |   | 2005 |  
|                                                    |  |                |        |                 |             |                |        |                     |  |   |              |            |  |  |            |         |   |      |  
|                                                    |  | (Unaudited)    |        |                 |             |                |        |                     |  |   |              |            |  | 
|                                                    |  | (In thousands) |        |                 |             | (In thousands) |       
|Cash Flow Data                                      |  |                |        |                 |             |                |        |                     |  |   |              |            |  |  |            |         |   |      |   |         |   |  |   |          |  
|Net cash provided by (used in) operating activities |  | $              | 1,659  |                 |             | $              | (40    | )                   |  | $ | 1,826        |            |  |  | $          | (135    | ) |      | $ | 10,351  |   |  | $ | (29,518  | )
|Net cash (used in) provided by investing activities |  |                | (8,831 | )               |             |                | (1,480 | )                   |  |   | 10,880       |            |  |  |            | (35,344 | ) |      |   | (61,372 | ) |  |   | (150,898 | )
|Net cash provided by (used in) financing activities |  |                | 7,473  |                 |             |                | 1,056  |                     |  |   | (2,415       | )          |  |  |            | 57,521  |   |      |   | 31,167  |   |  |   | 189,269  |  
|Capital expenditures                                |  | $              | 8,566  |                 |             | $              | 1,375  |                     |  | $ | 1,717        |            |  |  |            | 32,863  |   |      |   | 63,594  |   |  |   | 150,849  |  
|Other Financial Information (unaudited):            |  |                |        |                 |             |                |        |                     |  |   |              |            |  |  |            |         |   |      |   |         |   |  |   |          |  
|Adjusted EBITDA(1)                                  |  |                |        |                 |             |                |        |                     |  |   |              |            |  |  | $          | 1,014   |   |      | $ | 11,298  |   |  | $ | 21,706   |  

|                                                                                                |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |        |         |  |   |         |         | 
|----------------------------------------------------------------------------------------------- | -------------------------------------- | ------------------ | ------ | ------ | ------------------ | -------------- | ------ | ------ | ---------- |  | - | ---------- | ------ |  | ---- | ------ | ------- |  | - | ------- | ------- | 
|                                                                                                |                                        | Predecessor        |        |        |                    | Successor      |       
|                                                                                                |                                        |                    |        |        |                    |                |       
|                                                                                                |                                        |                    |        |        | As of December 31, |               
|                                                                                                |                                        | As of December 31, |        |        |                    |                |       
|                                                                                                |                                        |                    |        |        |                    | 2003           |        |        | 2004       |  |   |           
|                                                                                                |                                        | 2001               |        |        | 2002               |                |        |        | (Restated) |  |   | (Restated) |        |  | 2005 |       
|                                                                                                |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |       
|                                                                                                |                                        | (Unaudited)        |        |        |                    |                |        |        |            | 
|                                                                                                |                                        | (In thousands)     |        |        |                    | (In thousands) |       
|Balance Sheet Data:                                                                             |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |        |         |  |   |         |        
|Cash and cash equivalents(2)                                                                    |                                        | $                  | 1,006  |        |                    | $              | 542    |        |            |  | $ | 22,043     |        |  | $    | 2,188  |         |  | $ | 11,041  |        
|Other current assets                                                                            |                                        |                    | 447    |        |                    |                | 710    |        |            |  |   | 1,971      |        |  |      | 5,892  |         |  |   | 23,692  |        
|Natural gas and oil properties, net of accumulated depreciation,
    depletion and amortization |                                        |                    | 12,831 |        |                    |                | 12,829 |        |            |  |   | 52,307     |        |  |      | 95,381 |         |  |   | 238,858 |        
|Property, plant and equipment, net of accumulated depreciation                                  |                                        |                    | 2,958  |        |                    |                | 2,778  |        |            |  |   | 370        |        |  |      | 1,387  |         |  |   | 2,525   |        
|Other assets                                                                                    |                                        |                    | 208    |        |                    |                | 168    |        |            |  |   | 2,486      |        |  |      | 577    |         |  |   | 3,428   |        
|                                                                                                |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |       
|                                                                                                | Total assets                           |                    | $      | 17,450 |                    |                | $      | 17,027 |            |  |   | $          | 79,177 |  |      | $      | 105,425 |  |   | $       | 279,544 | 
|                                                                                                |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |       
|Current liabilities                                                                             |                                        | $                  | 3,498  |        |                    | $              | 3,468  |        |            |  | $ | 20,200     |        |  | $    | 10,216 |         |  | $ | 86,058  |        
|Long-term debt                                                                                  |                                        |                    | 2,686  |        |                    |                | 1,919  |        |            |  |   | 41,518     |        |  |      | 72,750 |         |  |   | 206,814 |        
|Other long-term liabilities                                                                     |                                        |                    |       |        |                    |                |       |        |            |  |   | 3,123      |        |  |      | 12,939 |         |  |   | 33,503  |        
|Members capital (deficit)                                                                      |                                        |                    | 11,266 |        |                    |                | 11,640 |        |            |  |   | 14,336     |        |  |      | 9,520  |         |  |   | (46,831 | )      
|                                                                                                |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |       
|                                                                                                | Total liabilities and members capital |                    | $      | 17,450 |                    |                | $      | 17,027 |            |  |   | $          | 79,177 |  |      | $      | 105,425 |  |   | $       | 279,544 | 
|                                                                                                |                                        |                    |        |        |                    |                |        |        |            |  |   |            |        |  |      |       






|    |                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | See Non-GAAP Financial Measure on page 38 of
    this Annual Report on
    Form 10-K.                                                                                                                      
|   
|(2) | In December 2003, we borrowed approximately $18 million
    under our credit facility to pay the remaining purchase price
    for the Waco acquisition, which amount was paid to Waco on
    January 2, 2004.

36



---



##### 



SUMMARY RESERVE AND OPERATING DATA




|                                                        |                                         |                    |       |       |      |   |       |       |       |   |       |       |       | 
|------------------------------------------------------- | --------------------------------------- | ------------------ | ----- | ----- | ---- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                                        |                                         | As of December 31, |      
|                                                        |                                         |                    |      
|                                                        |                                         | 2003               |       |       | 2004 |   |       | 2005  |      
|                                                        |                                         |                    |       |       |      |   |       |       |      
|Reserve Data:                                           |                                         |                    |       |       |      |   |       |       |       |   |       |      
|Estimated net proved reserves:                          |                                         |                    |       |       |      |   |       |       |       |   |       |      
|                                                        | Natural gas (Bcf)                       |                    |       | 68.9  |      |   |       | 118.9 |       |   |       | 191.9 |      
|                                                        | Oil (MMBbls)                            |                    |       | 0.2   |      |   |       | 0.1   |       |   |       | 0.2   |      
|                                                        |                                         | Total (Bcfe)       |       |       | 69.8 |   |       |       | 119.8 |   |       |       | 193.2 | 
|Proved developed (Bcfe)                                 |                                         |                    | 41.8  |       |      |   | 74.4  |       |       |   | 125.2 |      
|Proved undeveloped (Bcfe)                               |                                         |                    | 28.0  |       |      |   | 45.4  |       |       |   | 68.0  |      
|Proved developed reserves as % of total proved reserves |                                         |                    | 59.9  | %     |      |   | 62.1  | %     |       |   | 64.8  | %    
|Standardized Measure (in millions)(1)                   |                                         | $                  | 126.3 |       |      | $ | 215.0 |       |       | $ | 552.1 |      
|Representative Natural Gas and Oil Prices:              |                                         |                    |       |       |      |   |       |       |       |   |       |      
|                                                        | Natural gas  NYMEX Henry Hub per MMBtu |                    | $     | 5.97  |      |   | $     | 6.18  |       |   | $     | 10.08 |      
|                                                        | Oil  NYMEX WTI per Bbl                 |                    |       | 32.76 |      |   |       | 43.36 |       |   |       | 57.98 |      

|                             |                                                   |                     |   |       |              |  |   |       |  |  |   |        | 
|---------------------------- | ------------------------------------------------- | ------------------- | - | ----- | ------------ |  | - | ----- |  |  | - | ------ | 
|                             |                                                   | Period from         |   |       |              |  |  
|                             |                                                   | March 14, 2003      |   |       |             
|                             |                                                   | (inception) through |   |       | Year Ended   | 
|                             |                                                   | December 31,        |   |       | December 31, | 
|                             |                                                   |                     |   |       |              | 
|                             |                                                   | 2003(2)             |   |       | 2004         |  |   |      
|                             |                                                   | (Restated)          |   |       | (Restated)   |  |   | 2005  | 
|                             |                                                   |                     |   |       |              |  |   |       | 
|Net Production:              |                                                   |                     |   |       |              |  |   |       |  |  |   |       
|                             | Total production (MMcfe)                          |                     |   | 492   |              |  |   | 3,112 |  |  |   | 4,839  | 
|                             | Average daily production (Mcfe/d)                 |                     |   | 2,299 |              |  |   | 8,526 |  |  |   | 13,258 | 
|Average Sales Prices:        |                                                   |                     |   |       |              |  |   |       |  |  |   |       
|                             | Weighted average realized natural gas price (Mcf) |                     | $ | 5.26  |              |  | $ | 5.73  |  |  | $ | 6.92   | 
|                             | Weighted average realized price (Mcfe)            |                     |   | 5.25  |              |  |   | 5.74  |  |  |   | 6.97   | 
|Average Unit Costs per Mcfe: |                                                   |                     |   |       |              |  |   |       |  |  |   |       
|                             | Operating expenses                                |                     | $ | 1.62  |              |  | $ | 1.53  |  |  | $ | 1.52   | 
|                             | General and administrative expenses               |                     |   | 1.59  |              |  |   | 0.48  |  |  |   | 0.69   | 
|                             | Depreciation, depletion and amortization          |                     |   | 1.14  |              |  |   | 1.17  |  |  |   | 1.51   | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Standardized Measure is the present value of estimated future
    net revenues to be generated from the production of proved
    reserves, determined in accordance with the rules and
    regulations of the SEC (using prices and costs in effect as of
    the date of estimation) without giving effect to non-property
    related expenses such as general and administrative expenses,
    debt service and future income tax expenses or to depreciation,
    depletion and amortization and discounted using an annual
    discount rate of 10%. Our Standardized Measure does not include
    future income tax expenses because our reserves are owned by our
    subsidiary Linn Energy Holdings, LLC, which is not subject to
    income taxes. Standardized Measure does not give effect to
    derivative transactions. For a description of our derivative
    transactions, please read Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Cash Flow from Operations in
    Item 7 to this Annual Report on
    Form 10-K.
|   
|(2) | In the period ended December 31, 2003, production commenced
    on May 30, 2003 following the purchase of natural gas
    properties from Emax Oil Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

37



---



##### 



NON-GAAP FINANCIAL MEASURE


Adjusted EBITDA






| |   |                                                             
| | - | ------------------------------------------------------------
| |  | Interest expense;                                           
|
| |  | Depreciation, depletion and amortization;                   
|
| |  | Write-off of deferred financing fees;                       
|
| |  | (Gain) loss on sale of assets;                              
|
| |  | (Gain) loss from equity investment;                         
|
| |  | Accretion of asset retirement obligation;                   
|
| |  | Unrealized (gain) loss on natural gas swaps;                
|
| |  | Realized (gain) loss on cancelled natural gas
    swaps; and
|
| |  | Income tax provision.                                       







|                |                                                       |                     |        |       |              |   |        |       |  |   |         |        | 
|--------------- | ----------------------------------------------------- | ------------------- | ------ | ----- | ------------ | - | ------ | ----- |  | - | ------- | ------ | 
|                |                                                       | Period from         |        |       |              |   |       
|                |                                                       | March 14, 2003      |        |       |             
|                |                                                       | (inception) through |        |       | Year Ended   |  
|                |                                                       | December 31,        |        |       | December 31, |  
|                |                                                       |                     |        |       |              |  
|                |                                                       | 2003                |        |       | 2004         |   |        |      
|                |                                                       | (Restated)          |        |       | (Restated)   |   |        | 2005  | 
|                |                                                       |                     |        |       |              |   |        |       | 
|                |                                                       | (In thousands)      |       
|Net (loss)      |                                                       | $                   | (1,688 | )     |              | $ | (4,816 | )     |  | $ | (56,351 | )     
|Plus:           |                                                       |                     |        |       |              |   |        |       |  |   |         |       
|                | Interest expense                                      |                     |        | 517   |              |   |        | 3,530 |  |   |         | 7,040  | 
|                | Depreciation, depletion and amortization              |                     |        | 562   |              |   |        | 3,656 |  |   |         | 7,294  | 
|                | Write-off of deferred financing fees                  |                     |        |      |              |   |        |      |  |   |         | 364    | 
|                | Loss on sale of assets                                |                     |        | 5     |              |   |        | 33    |  |   |         | 39     | 
|                | Loss from equity investment                           |                     |        | 3     |              |   |        | 56    |  |   |         | 17     | 
|                | Accretion of asset retirement obligation              |                     |        | 15    |              |   |        | 74    |  |   |         | 172    | 
|                | Unrealized loss on natural gas derivatives            |                     |        | 1,600 |              |   |        | 8,765 |  |   |         | 24,776 | 
|                | Realized loss on cancelled natural gas derivatives(1) |                     |        |      |              |   |        |      |  |   |         | 38,281 | 
|                | Income tax provision(2)                               |                     |        |      |              |   |        |      |  |   |         | 74     | 
|                |                                                       |                     |        |       |              |   |        |       | 
|Adjusted EBITDA |                                                       | $                   | 1,014  |       |              | $ | 11,298 |       |  | $ | 21,706  |       
|                |                                                       |                     |        |       |              |   |        |       | 






|    |                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | During 2005, we cancelled (before their original settlement
    date) a portion of
    out-of-the-money
    natural gas swaps and realized a loss of $38.3 million. We
    subsequently hedged similar volumes at higher prices.

38



---



##### 





|    |                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Linn Operating, LLC was not subject to federal income tax before
    converting to a subchapter C-corporation on June 1, 2005.
    Prior to the conversion, there was no tax provision included in
    our consolidated financial statements because all of our taxable
    income or loss was included in the income tax returns of the
    individual members.






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussion and analysis should be read in
conjunction with the Selected Historical Consolidated
Financial and Operating Data and the financial statements
and related notes included elsewhere in this Annual Report on
Form 10-K. The
following discussion contains forward-looking statements that
reflect our future plans, estimates, beliefs and expected
performance. The forward-looking statements are dependent upon
events, risks and uncertainties that may be outside our control.
Our actual results could differ materially from those discussed
in these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to,
market prices for natural gas, production volumes, estimates of
proved reserves, capital expenditures, economic and competitive
conditions, regulatory changes and other uncertainties, as well
as those factors discussed below and elsewhere in this Annual
Report on
Form 10-K,
particularly in Risk Factors contained in
Item 1A of this Annual Report on
Form 10-K. In
light of these risks, uncertainties and assumptions, the
forward-looking events discussed may not occur.


Overview




reserves-to


39



---



##### 





|         |  |                                 |  |       |  |                            |  |               |       | 
|-------- |  | ------------------------------- |  | ----- |  | -------------------------- |  | ------------- | ----- | 
|         |  |                                 |  |       |  |                            |  | Restated      |      
|         |  |                                 |  |       |  |                            |  | Purchase      |      
|Date     |  | Seller                          |  | Wells |  | Location                   |  | Price         |      
|         |  |                                 |  |       |  |                            |  |               |      
|         |  |                                 |  |       |  |                            |  | (in millions) |      
|May 2003 |  | Emax Oil Company                |  | 34    |  | West Virginia              |  | $             | 3.2   | 
|Aug 2003 |  | Lenape Resources, Inc.          |  | 61    |  | New York                   |  |               | 2.2   | 
|Sep 2003 |  | Cabot Oil & Gas Corporation     |  | 50    |  | Pennsylvania               |  |               | 15.8  | 
|Oct 2003 |  | Waco Oil & Gas Company          |  | 353   |  | West Virginia and Virginia |  |               | 31.5  | 
|May 2004 |  | Mountain V Oil & Gas, Inc.      |  | 251   |  | Pennsylvania               |  |               | 12.5  | 
|Sep 2004 |  | Pentex Energy, Inc.             |  | 447   |  | Pennsylvania               |  |               | 15.1  | 
|Apr 2005 |  | Columbia Natural Resources, LLC |  | 38    |  | West Virginia and Virginia |  |               | 4.4   | 
|Aug 2005 |  | GasSearch Corporation           |  | 130   |  | West Virginia              |  |               | 5.4   | 
|Oct 2005 |  | Exploration Partners, LLC       |  | 550   |  | West Virginia and Virginia |  |               | 111.4 | 
|         |  |                                 |  |       |  |                            |  |               |      
|         |  | Total                           |  | 1,914 |  |                            |  | $             | 201.5 | 
|         |  |                                 |  |       |  |                            |  |               |      

period-to












40



---



##### 





Our Operations




Production and Operating Costs Reporting




Land and Lease Tracking System




41



---



##### 



Results of Operations




|                             |                                                   |                                  |   |        |              |  |   |        |        |  |   |         |         |  
|---------------------------- | ------------------------------------------------- | -------------------------------- | - | ------ | ------------ |  | - | ------ | ------ |  | - | ------- | ------- | -
|                             |                                                   | Period from                      |   |        |              |  |  
|                             |                                                   | March 14, 2003                   |   |        |             
|                             |                                                   | (inception) through              |   |        | Year Ended   | 
|                             |                                                   | December 31,                     |   |        | December 31, | 
|                             |                                                   |                                  |   |        |              | 
|                             |                                                   | 2003                             |   |        | 2004         |  |   |       
|                             |                                                   | (Restated)                       |   |        | (Restated)   |  |   | 2005   |       
|                             |                                                   |                                  |   |        |              |  |   |        |       
|                             |                                                   | (In thousands, except production |  
|                             |                                                   | and price data)                  |  
|Revenues:                    |                                                   |                                  |   |        |              |  |   |        |        |  |   |        
|                             | Natural gas and oil sales                         |                                  | $ | 2,379  |              |  | $ | 19,502 |        |  | $ | 44,645  |        
|                             | Realized gain (loss) on natural gas derivatives   |                                  |   | 163    |              |  |   | (2,239 | )      |  |   | (51,417 | )      
|                             | Unrealized (loss) on natural gas derivatives      |                                  |   | (1,600 | )            |  |   | (8,765 | )      |  |   | (24,776 | )      
|                             | Natural gas marketing revenues                    |                                  |   |       |              |  |   | 520    |        |  |   | 4,722   |        
|                             | Other revenues                                    |                                  |   | 4      |              |  |   | 160    |        |  |   | 345     |        
|                             |                                                   |                                  |   |        |              |  |   |        |       
|                             |                                                   | Total revenue                    |   |        | 946          |  |   |        | 9,178  |  |   |         | (26,481 | )
|Expenses:                    |                                                   |                                  |   |        |              |  |   |        |        |  |   |        
|                             | Operating expenses                                |                                  | $ | 798    |              |  | $ | 4,756  |        |  | $ | 7,356   |        
|                             | Natural gas marketing expense                     |                                  |   |       |              |  |   | 482    |        |  |   | 4,401   |        
|                             | General and administrative expenses               |                                  |   | 783    |              |  |   | 1,488  |        |  |   | 3,332   |        
|                             | Depreciation, depletion and amortization          |                                  |   | 562    |              |  |   | 3,656  |        |  |   | 7,294   |        
|                             |                                                   |                                  |   |        |              |  |   |        |       
|                             |                                                   | Total expenses                   |   |        | 2,143        |  |   |        | 10,382 |  |   |         | 22,383  |  
|Other Income and (Expenses): |                                                   |                                  |   |        |              |  |   |        |        |  |   |        
|                             | Interest and financing expenses                   |                                  | $ | (517   | )            |  | $ | (3,530 | )      |  | $ | (7,040  | )      
|                            
|Net Production:              |                                                   |                                  |   |        |              |  |   |        |        |  |   |        
|                             | Total production (MMcfe)                          |                                  |   | 492    |              |  |   | 3,112  |        |  |   | 4,839   |        
|                             | Average daily production (Mcfe/d)                 |                                  |   | 2,299  |              |  |   | 8,526  |        |  |   | 13,258  |        
|Average Sales Prices:        |                                                   |                                  |   |        |              |  |   |        |        |  |   |        
|                             | Weighted average realized natural gas price (Mcf) |                                  | $ | 5.26   |              |  | $ | 5.73   |        |  | $ | 6.92    |        
|                             | Weighted average realized price (Mcfe)            |                                  |   | 5.25   |              |  |   | 5.74   |        |  |   | 6.97    |        
|Average Unit Costs per Mcfe: |                                                   |                                  |   |        |              |  |   |        |        |  |   |        
|                             | Operating expenses                                |                                  | $ | 1.62   |              |  | $ | 1.53   |        |  | $ | 1.52    |        
|                             | General and administrative expenses               |                                  |   | 1.59   |              |  |   | 0.48   |        |  |   | 0.69    |        
|                             | Depreciation, depletion and amortization          |                                  |   | 1.14   |              |  |   | 1.17   |        |  |   | 1.51    |        

42



---



##### 



Year Ended December 31, 2005 Compared to Year Ended
December 31, 2004




| |        
| | -------
| | Revenue



|                      |                                                   |              |   |       |            |  |            |            |  |  |  |     | 
|--------------------- | ------------------------------------------------- | ------------ | - | ----- | ---------- |  | ---------- | ---------- |  |  |  | --- | 
|                      |                                                   | Year Ended   |   |       |           
|                      |                                                   | December 31, |   |       | Percentage | 
|                      |                                                   |              |   |       | Increase   | 
|                      |                                                   | 2004         |   |       |            |  | (Decrease) |           
|                      |                                                   | (Restated)   |   |       | 2005       |  |            | (Restated) | 
|                      |                                                   |              |   |       |            |  |            |            | 
|Net Production:       |                                                   |              |   |       |            |  |            |            |  |  |  |    
|                      | Total production (MMcfe)                          |              |   | 3,112 |            |  |            | 4,839      |  |  |  | 55% | 
|                      | Average daily production (Mcfe/d)                 |              |   | 8,526 |            |  |            | 13,258     |  |  |  | 56% | 
|Average Sales Prices: |                                                   |              |   |       |            |  |            |            |  |  |  |    
|                      | Weighted average realized natural gas price (Mcf) |              | $ | 5.73  |            |  | $          | 6.92       |  |  |  | 21% | 
|                      | Weighted average realized price (Mcfe)            |              |   | 5.74  |            |  |            | 6.97       |  |  |  | 21% | 





| |                      
| | ---------------------
| | Derivative Activities

out-of




| |         
| | --------
| | Expenses



|                            |  |              |      |  |            |   |            |            |  |  |    |   
|--------------------------- |  | ------------ | ---- |  | ---------- | - | ---------- | ---------- |  |  | -- | --
|                            |  | Year Ended   |      |  |           
|                            |  | December 31, |      |  | Percentage |  
|                            |  |              |      |  | Increase   |  
|                            |  | 2004         |      |  |            |   | (Decrease) |           
|                            |  | (Restated)   |      |  | 2005       |   |            | (Restated) | 
|                            |  |              |      |  |            |   |            |            | 
|Operating expenses per Mcfe |  | $            | 1.53 |  |            | $ | 1.52       |            |  |  | (1 | )%



43



---



##### 





|                                             |  |              |      |  |            |   |            |            |  |  |    |  
|-------------------------------------------- |  | ------------ | ---- |  | ---------- | - | ---------- | ---------- |  |  | -- | -
|                                             |  | Year Ended   |      |  |           
|                                             |  | December 31, |      |  | Percentage |  
|                                             |  |              |      |  | Increase   |  
|                                             |  | 2004         |      |  |            |   | (Decrease) |           
|                                             |  | (Restated)   |      |  | 2005       |   |            | (Restated) | 
|                                             |  |              |      |  |            |   |            |            | 
|General and administrative expenses per Mcfe |  | $            | 0.48 |  |            | $ | 0.69       |            |  |  | 44 | %





C-corporation


44



---



##### 



Year Ended December 31, 2004 Compared to the Period from
March 14, 2003 (inception) through December 31,
2003




| |        
| | -------
| | Revenue



|                      |                                                   |                     |   |       |              |  |   |            |  |  |  |     |  
|--------------------- | ------------------------------------------------- | ------------------- | - | ----- | ------------ |  | - | ---------- |  |  |  | --- | -
|                      |                                                   | Period from         |   |       |              |  |  
|                      |                                                   | March 14, 2003      |   |       |              |  |  
|                      |                                                   | (inception) through |   |       | Year Ended   |  |   | Percentage | 
|                      |                                                   | December 31,        |   |       | December 31, |  |   | Increase   | 
|                      |                                                   | 2003                |   |       | 2004         |  |   | (Decrease) | 
|                      |                                                   | (Restated)          |   |       | (Restated)   |  |   | (Restated) | 
|                      |                                                   |                     |   |       |              |  |   |            | 
|Net Production:       |                                                   |                     |   |       |              |  |   |            |  |  |  |    
|                      | Total production (MMcfe)                          |                     |   | 492   |              |  |   | 3,112      |  |  |  | 533 | %
|                      | Average daily production (Mcfe/d)                 |                     |   | 2,299 |              |  |   | 8,526      |  |  |  | 271 | %
|Average Sales Prices: |                                                   |                     |   |       |              |  |   |            |  |  |  |    
|                      | Weighted average realized natural gas price (Mcf) |                     | $ | 5.26  |              |  | $ | 5.73       |  |  |  | 9   | %
|                      | Weighted average realized price (Mcfe)            |                     |   | 5.25  |              |  |   | 5.74       |  |  |  | 9   | %



| |                   
| | ------------------
| | Hedging Activities





| |         
| | --------
| | Expenses



|                            |  |                     |      |  |              |   |      |            |  |  |    |   
|--------------------------- |  | ------------------- | ---- |  | ------------ | - | ---- | ---------- |  |  | -- | --
|                            |  | Period from         |      |  |              |   |     
|                            |  | March 14, 2003      |      |  |              |   |     
|                            |  | (inception) through |      |  | Year Ended   |   |      | Percentage | 
|                            |  | December 31,        |      |  | December 31, |   |      | Increase   | 
|                            |  | 2003                |      |  | 2004         |   |      | (Decrease) | 
|                            |  | (Restated)          |      |  | (Restated)   |   |      | (Restated) | 
|                            |  |                     |      |  |              |   |      |            | 
|Operating expenses per Mcfe |  | $                   | 1.62 |  |              | $ | 1.53 |            |  |  | (6 | )%

45



---



##### 





|                                             |  |                     |      |  |              |   |      |            |  |  |     |   
|-------------------------------------------- |  | ------------------- | ---- |  | ------------ | - | ---- | ---------- |  |  | --- | --
|                                             |  | Period from         |      |  |              |   |     
|                                             |  | March 14, 2003      |      |  |              |   |     
|                                             |  | (inception) through |      |  | Year Ended   |   |      | Percentage | 
|                                             |  | December 31,        |      |  | December 31, |   |      | Increase   | 
|                                             |  | 2003                |      |  | 2004         |   |      | (Decrease) | 
|                                             |  | (Restated)          |      |  | (Restated)   |   |      | (Restated) | 
|                                             |  |                     |      |  |              |   |      |            | 
|General and administrative expenses per Mcfe |  | $                   | 1.59 |  |              | $ | 0.48 |            |  |  | (70 | )%





Capital Resources and Liquidity




out-of


46



---



##### 





Cash Flow from Operations














|                   |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |       | 
|------------------ | ------------------------ | --------- | - | ----- | --------- |  | - | --------- |  |  | --------- | ------ |  |  | - | ----- | 
|                   |                          | Year 2006 |   |       | Year 2007 |  |   | Year 2008 |  |  | Year 2009 |       
|                   |                          |           |   |       |           |  |   |           |  |  |           |       
|Fixed Price Swaps: |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |      
|                   | Hedged Volume (MMMBtu)   |           |   | 7,412 |           |  |   | 7,168     |  |  |           | 8,464  |  |  |   | 6,205 | 
|                   | Average Price ($/ MMBtu) |           | $ | 9.26  |           |  | $ | 8.64      |  |  | $         | 8.23   |  |  | $ | 7.56  | 
|Puts:              |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |      
|                   | Hedged Volume (MMMBtu)   |           |   | 730   |           |  |   | 2,336     |  |  |           | 2,013  |  |  |   |      | 
|                   | Average Price ($/ MMBtu) |           | $ | 8.83  |           |  | $ | 9.11      |  |  | $         | 9.50   |  |  | $ |      | 
|Total:             |                          |           |   |       |           |  |   |           |  |  |           |        |  |  |   |      
|                   | Hedged Volume (MMMBtu)   |           |   | 8,142 |           |  |   | 9,504     |  |  |           | 10,477 |  |  |   | 6,205 | 
|                   | Average Price ($/ MMBtu) |           | $ | 9.22  |           |  | $ | 8.75      |  |  | $         | 8.47   |  |  | $ | 7.56  | 

47



---



##### 



Investing Activities  Acquisitions and Capital
Expenditures






Financing Activities


Sales and Issuances of Securities.


Credit Facility.








48



---



##### 









| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | repay all outstanding amounts under our previous credit
    facility, which we used to finance our acquisitions and meet
    working capital requirements;     
|
| |  | repay a $5.0 million subordinated term loan from First
    National Bank Albany Breckenridge;                                                                  
|
| |  | pay expenses incurred in connection with the closing of the new
    credit facility;                                                                           
|
| |  | fund the $4.4 million purchase price of assets from
    Columbia Natural Resources, LLC;                                                                       
|
| |  | fund the $5.4 million purchase price of assets from
    GasSearch Corporation;                                                                                 
|
| |  | pay $38.3 million in connection with the cancelled (before
    their original settlement date) portion of
    out-of-the-money
    natural gas derivatives; and
|
| |  | fund the $111.4 million purchase price of assets from
    Exploration Partners, LLC.                                                                           









| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | the London interbank offered rate (LIBOR) plus an
    applicable margin between 1.00% and 1.75% per annum; or
|
| |  | a domestic bank rate plus an applicable margin between 0% and
    0.25% per annum.                             





| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | incur indebtedness;                                                                                  
|
| |  | grant certain liens;                                                                                 
|
| |  | make certain loans, acquisitions, capital expenditures and
    investments;                          
|
| |  | make distributions other than from available cash;                                                   
|
| |  | merge or consolidate; or                                                                             
|
| |  | engage in certain asset dispositions, including a sale of all or
    substantially all of our assets.

49



---



##### 







| |   |                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidated net income plus interest expense, income taxes,
    depreciation, depletion, amortization and other similar charges,
    minus all non-cash income added to consolidated net income and
    giving pro forma effect to any acquisitions or capital
    expenditures, to interest expense of not less than 2.5 to 1.0;
    and
|
| |  | consolidated current assets, including the unused amount of the
    total commitments, to consolidated current liabilities of not
    less than 1.0 to 1.0, excluding non-cash assets and obligations
    under SFAS No. 133, which includes the current portion of
    natural gas and interest rate swaps.                              







| |   |                                                                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | default by us on the payment of any other indebtedness in excess
    of $1.0 million, or any event occurs that permits or causes
    the acceleration of the indebtedness;                                                                                                                                                                                 
|
| |  | bankruptcy or insolvency events involving us or our subsidiaries;                                                                                                                                                                                                                                                                                          
|
| |  | the entry of, and failure to pay, one or more adverse judgments
    in excess of $1.0 million or one or more non-monetary
    judgments that could reasonably be expected to have a material
    adverse effect and for which enforcement proceedings are brought
    or that are not stayed pending appeal;                                               
|
| |  | specified events relating to our employee benefit plans that
    could reasonably be expected to result in liabilities in excess
    of $1.0 million in any year;                                                                                                                                                                                          
|
| |  | a change of control, which includes (1) a decrease to 25%
    or less of our managements and Quantum Energy
    Partners aggregate ownership in us combined with the
    acquisition by a third party of more than 35% of our units, or
    (2) the replacement of a majority of our directors by
    persons not approved by our Board of Directors; and
|
| |  | certain other customary events of default.                                                                                                                                                                                                                                                                                                                 





Subordinated Term Loan.




50



---



##### 



Contractual Obligations.


|                             |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |     |   |   |       |       |   |        |         |         | 
|---------------------------- | ----- | ---------------------------------- | ------ | ------ | ---- | - | - | ---- | --- | - | ---- | --- | --- | ---- | - | ------- | ------- | - | - | ----- | --- | - | - | ----- | ----- | - | ------ | ------- | ------- | 
|                             |       | Payments Due By Year(1)(2)         |       
|                             |       |                                    |       
|                             |       |                                    |        | After  |      |   |  
|                             |       | 2006(3)                            |        |        | 2007 |   |   | 2008 |     |   | 2009 |     |     | 2010 |   |         | 2010    |   |   | Total |    
|                             |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |    
|                             |       | ($ in thousands)                   |       
|Subordinated Term Loan(3)    |       | $                                  | 60,000 |        |      | $ |  |      |     | $ |     |     |     | $    |  |         |         | $ |  |       |     | $ |  |       |       | $ | 60,000 |        
|Long-Term Debt Obligations:  |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |     |   |   |       |       |   |        |        
|                             |       | Long-term notes payable            |        |        | 113  |   |   |      | 121 |   |      |     | 125 |      |   |         | 81      |   |   |       | 47  |   |   |       | 321   |   |        |         | 808     | 
|                             |       | Credit facility(3)                 |        |        |     |   |   |      |    |   |      |     |    |      |   |         | 207,000 |   |   |       |    |   |   |       |      |   |        |         | 207,000 | 
|Operating Lease Obligations: |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |     |   |   |       |       |   |        |        
|                             |       | Office and office equipment leases |        |        | 447  |   |   |      | 429 |   |      |     | 399 |      |   |         | 343     |   |   |       | 298 |   |   |       | 1,496 |   |        |         | 3,412   | 
|Other Long-Term Liabilities: |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |     |   |   |       |       |   |        |        
|                             |       | Asset retirement obligation        |        |        |     |   |   |      |    |   |      |     |    |      |   |         |        |   |   |       |    |   |   |       | 5,443 |   |        |         | 5,443   | 
|                             |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |    
|                             | Total |                                    | $      | 60,560 |      |   | $ | 550  |     |   | $    | 524 |     |      | $ | 207,424 |         |   | $ | 345   |     |   | $ | 7,260 |       |   | $      | 276,663 |        
|                             |       |                                    |        |        |      |   |   |      |     |   |      |     |     |      |   |         |         |   |   |       |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This table does not include any liability associated with
    derivatives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(2) | This table does not include interest as interest rates are
    variable and principal balances fluctuate significantly from
    period to period. Based on the December 31, 2005
    subordinated term loan balance of $60.0 million and an
    interest rate of 8.169%, the annual interest expense would be
    approximately $4.9 million. Based on the December 31,
    2005 credit facility balance of $207.0 million and a
    weighted average interest rate of 6.11%, the annual interest
    expense would be approximately $12.6 million.
|   
|(3) | With the proceeds from our initial public offering in 2006, we
    reduced then-existing indebtedness by $122.0 million
    including the repayment, in full, of the indebtedness under our
    subordinated term loan.                                                                                                                                                                                                                                                                                                                            



| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements



Critical Accounting Policies and Estimates




Natural Gas and Oil Properties




51



---



##### 





 Financial
Accounting and Reporting for Oil and Gas Producing Companies Accounting for Asset
Retirement Obligations.










Natural Gas and Oil Reserve Quantities








52



---



##### 



Revenue Recognition














Derivative Instruments


 Accounting for Derivative
Instruments and Hedging Activities,




53



---



##### 







Acquisitions












Stock Based Compensation


 Share-Based
Payment. Share-Based Payment,


54



---



##### 





Share-Based Payment


Newly Adopted Accounting Pronouncements


 Accounting for Conditional Asset
Retirement Obligations


Accounting for
Suspended Well Costs Financial Accounting and
Reporting by Oil and Gas Producing Companies




| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | net changes from period to period of capitalized exploratory
    well costs for wells that are pending the determination of
    proved reserves;
|
| |  | the amount of exploratory well costs that have been capitalized
    for a period greater than one year after the completion of
    drilling; and
|
| |  | an aging of exploratory well costs suspended for greater than
    one year with the number of wells to which they related.                      



55



---



##### 





Accounting Changes and Error Corrections, Accounting Changes, Reporting Accounting
Changes in Interim Financial Statements







|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market Risk



Commodity Price Risk








10-K.


Interest Rate Risks




56



---



##### 


















|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

10-K







|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on Accounting
    and Financial Disclosure






Item 9A. Controls and Procedures


Evaluation of disclosure controls and procedures. 13a-15 15d-15(e) 10-K.


Material weakness in internal control.


57



---



##### 





10-K,


Changes in internal control over financial reporting.


Remediation activities.




| |                                                                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. We engaged outside consultants with extensive natural
    gas and oil financial reporting experience to augment our
    current accounting resources to assist with this Annual Report
    on Form 10-K and
    future filings.    
|
| | 2. We performed additional analysis and other post closing
    procedures to enable the preparation of accurate consolidated
    financial statements, including all required disclosures.                                            
|
| | 3. We have developed and implemented a process for
    determining the effective accounting date for an oil and gas
    property acquisition and formalized procedures necessary to
    appropriately account for future acquisitions.



10-K.






Limitations of the effectiveness of internal control.


58



---



##### 








Item 9B.     Other
Information







PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



|                        |  |     |    |  |                           |                                                     
|----------------------- |  | --- | -- |  | ------------------------- | ----------------------------------------------------
|Name                    |  | Age |    |  | Position with Our Company
|                        |  |     |    |  |                          
|Michael C. Linn         |  |     | 54 |  |                           | President and Chief Executive Officer               
|Kolja Rockov            |  |     | 35 |  |                           | Executive Vice President and Chief Financial Officer
|Thomas A. Lopus         |  |     | 47 |  |                           | Senior Vice President  Operations                  
|Roland Chip P. Keddie |  |     | 53 |  |                           | Senior Vice President  Secretary                   
|David J. Grecco         |  |     | 39 |  |                           | Vice President and General Counsel                  
|Donald T. Robinson      |  |     | 31 |  |                           | Chief Accounting Officer                            
|Toby R. Neugebauer      |  |     | 35 |  |                           | Chairman                                            
|George A. Alcorn        |  |     | 73 |  |                           | Independent Director                                
|Terrence S. Jacobs      |  |     | 62 |  |                           | Independent Director                                
|Jeffrey C. Swoveland    |  |     | 50 |  |                           | Independent Director                                

Michael C. Linn


Kolja Rockov


Thomas A. Lopus


59



---



##### 



Roland Chip P. Keddie


David J. Grecco


Donald T. Robinson partner-in


Toby R. Neugebauer co-founder


George A. Alcorn


Terrence S. Jacobs


Jeffrey C. Swoveland


60



---



##### 





Composition of the Board of Directors






Committees of the Board of Directors




Audit Committee.




Compensation Committee.


Conflicts Committee.


61



---



##### 





Nominating Committee.


Compensation Committee Interlocks and Insider
Participation




Audit Committee Report




10-K










Communication with the Board of Directors
















Director Compensation




62



---



##### 







Code of Ethics


http://www.linnenergy.com









|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



Summary Compensation Table


|                      |                             |      |      |                     |  |              |         |                    |  |                    |         |         |  |  |        |     |  |   |       |   | 
|--------------------- | --------------------------- | ---- | ---- | ------------------- |  | ------------ | ------- | ------------------ |  | ------------------ | ------- | ------- |  |  | ------ | --- |  | - | ----- | - | 
|                      |                             |      |      | Annual Compensation |  |             
|                      |                             |      |      |                     |  |             
|                      |                             |      |      |                     |  | Other Annual |         | All Other         
|                      |                             | Year |      | Salary($)           |  | Bonus($)     |         | Compensation(1)($) |  | Compensation(2)($)
|                      |                             |      |      |                     |  |              |         |                    |  |                   
|Michael C. Linn       |                             |      | 2005 |                     |  |              | 200,000 |                    |  |                    |        |         |  |  |       |     |  | $ | 8,400 |  
|                      | President and Chief         |      |      | 2004                |  |              |         | 118,750            |  |                    |         | 200,000 |  |  |        |    |  |   |       |  | 
|                      | Executive Officer           |      |      |                     |  |              |         |                    |  |                    |         |         |  |  |        |     |  |   |       |   | 
|Kolja Rockov(3)       |                             |      | 2005 |                     |  |              | 159,848 |                    |  |                    | 100,000 |         |  |  |       |     |  | $ |      |  
|                      | Executive Vice President    |      |      | 2004                |  |              |         |                   |  |                    |         |        |  |  |        |    |  |   |       |  | 
|                      | and Chief Financial Officer |      |      |                     |  |              |         |                    |  |                    |         |         |  |  |        |     |  |   |       |   | 
|Gerald W. Merriam(4)  |                             |      | 2005 |                     |  |              | 140,000 |                    |  |                    | 50,000  |         |  |  |       |     |  | $ | 8,400 |  
|                      | Executive Vice President   |      |      | 2004                |  |              |         | 115,572            |  |                    |         | 50,000  |  |  |        |    |  |   |       |  | 
|                      | Engineering Operations      |      |      |                     |  |              |         |                    |  |                    |         |         |  |  |        |     |  |   |       |   | 
|Roland P. Keddie      |                             |      | 2005 |                     |  |              | 130,000 |                    |  |                    | 40,000  |         |  |  |       |     |  | $ | 7,200 |  
|                      | Senior Vice President      |      |      | 2004                |  |              |         | 105,000            |  |                    |         | 50,000  |  |  |        |    |  |   |       |  | 
|                      | Secretary                   |      |      |                     |  |              |         |                    |  |                    |         |         |  |  |        |     |  |   |       |   | 
|Donald T. Robinson(5) |                             |      | 2005 |                     |  |              | 70,833  |                    |  |                    | 40,000  |         |  |  | 34,021 | (6) |  | $ | 2,817 |  
|                      | Chief Accounting Officer    |      |      | 2004                |  |              |         |                   |  |                    |         |        |  |  |        |    |  |   |       |  | 






|    |                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Except as described, the value of perquisites and other personal
    benefits did not exceed the lesser of either $50,000 or 10% of
    the total annual salary and bonus reported for each named
    executive officer.
|   
|(2) | Amounts shown reflect company matching contributions under the
    Companys 401(k) Plan.                                                                                                                               
|   
|(3) | Mr. Rockov commenced employment with us in March 2005.                                                                                                                                                                  
|   
|(4) | Effective April 7, 2006, Mr. Merriam resigned his
    position with the Company.                                                                                                                                        

63



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##### 





|    |                                                                                       
|--- | --------------------------------------------------------------------------------------
|(5) | Mr. Robinson commenced employment with us in April 2005.                              
|   
|(6) | Amount represents a reimbursement by the Company of relocation
    costs and expenses.

Employment Agreements;
Change-of-Control
Arrangements


















64



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##### 









| |   |                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------
| |  | an option to purchase 50,000 units at an exercise price of
    $19.74 per unit subject to a service based three-year vesting
    schedule (the

|                         | 
|------------------------ | 
|Service Based Option); | 



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a second option to purchase 25,000 units at an exercise price of
    $19.74 per unit subject to a specified service requirement and a
    performance based

|                      | 
|--------------------- | 
|vesting schedule; and | 



| |   |                                                                                  
| | - | ---------------------------------------------------------------------------------
| |  | a grant of 20,000 restricted units subject to a specified
    service requirement

|                                          | 
|----------------------------------------- | 
|and a performance based vesting schedule. | 





|       |  |                                |               |  |                |  |                | 
|------ |  | ------------------------------ | ------------- |  | -------------- |  | -------------- | 
|Tier   |  | Performance Goal               |               |  | Service Period | 
|       |  |                                |               |  |                | 
|       |  | Companys annualized           |               |  |               
|       |  | distribution rate is at least: |               |  |               
|Tier A |  | $                              | 1.92 per unit |  |                |  | March 31, 2007 | 
|Tier B |  | $                              | 2.30 per unit |  |                |  | March 31, 2008 | 
|Tier C |  | $                              | 2.76 per unit |  |                |  | March 31, 2009 | 





65



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##### 
















|         |                                                                                                  
|-------- | -------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Unitholder Matters





| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | each person known by us to beneficially own 5% or more of our
    units;
|
| |  | each member of our Board of Directors;                                  
|
| |  | each of our named executive officers; and                               
|
| |  | all directors and executive officers as a group.                        



66



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##### 





|                            |                                                                 |              |            |            |              |  |      |      |  
|--------------------------- | --------------------------------------------------------------- | ------------ | ---------- | ---------- | ------------ |  | ---- | ---- | -
|                            |                                                                 |              |            | Percentage |             
|                            |                                                                 | Units        |            |            | of Units     | 
|                            |                                                                 | Beneficially |            |            | Beneficially | 
|Name of Beneficial Owner(1) |                                                                 | Owned        |            |            | Owned        | 
|                            |                                                                 |              |            |            |              | 
|Quantum Energy Partners(2)  |                                                                 |              | 10,144,585 |            |              |  | 36.4 | %   
|Michael C. Linn             |                                                                 |              | 3,662,122  |            |              |  | 13.2 | %   
|Kolja Rockov(3)             |                                                                 |              | 343,764    |            |              |  | 1.2  | %   
|Gerald W. Merriam(4)        |                                                                 |              | 475,622    |            |              |  | 1.7  | %   
|Roland P. Keddie            |                                                                 |              | 475,622    |            |              |  | 1.7  | %   
|Donald T. Robinson          |                                                                 |              | 1,200      |            |              |  | *    |     
|Toby R. Neugebauer(5)       |                                                                 |              | 10,244,585 |            |              |  | 36.8 | %   
|George A. Alcorn(6)         |                                                                 |              | 12,000     |            |              |  | *    |     
|Terrence S. Jacobs(6)       |                                                                 |              | 12,000     |            |              |  | *    |     
|Jeffrey C. Swoveland(6)     |                                                                 |              | 10,000     |            |              |  | *    |     
|                            | All executive officers and directors as a group (10 persons)(7) |              |            | 14,781,793 |              |  |      | 53.1 | %






| |   |                       
| | - | ----------------------
| | * | Less than 1% of class.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The address of each beneficial owner, unless otherwise noted, is
    c/o Linn Energy, LLC, 650 Washington Road, 8th Floor,
    Pittsburgh, PA 15228.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(2) | Based solely on information furnished in the Schedule 13D/
    A (Amend. No. 1) filed by QEP,
    QEM-LP and
    QEM-LLC (each as
    defined below) with the SEC on February 17, 2006. Quantum
    Energy Partners owns its units through Quantum Energy
    Partners II, LP (QEP). QEP is controlled by its
    general partner, Quantum Energy Management II, LP
    (QEM-LP),
    which is controlled by its general partner, Quantum Energy
    Management II, LLC
    (QEM-LLC),
    an affiliate of Quantum Energy Partners. QEP,
    QEM-LP and
    QEM-LLC can be
    contacted at the following address: c/o Quantum Energy
    Partners, 777 Walker Street, Suite 2530, Houston, Texas
    77002.
|   
|(3) | Includes 228,909 restricted units that vest in equal
    installments over a two-year period and 400 units as
    custodian under certain UGMA accounts for immediate family
    members as to which Mr. Rockov disclaims beneficial
    ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(4) | Mr. Merriam resigned from the Company in April 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(5) | Includes 10,144,585 units beneficially owned by Quantum
    Energy Partners and affiliated entities as described in
    note (2) above. Mr. Neugebauer, a principal of Quantum
    Energy Partners, could be deemed to beneficially own the units
    held by Quantum Energy Partners II, LP. Mr. Neugebauer
    disclaims beneficial ownership in the reported securities in
    excess of his indirect pecuniary interest in the securities.
    Mr. Neugebauer can be contacted at the following address:
    777 Walker Street, Suite 2530, Houston, Texas 77002.                                                                                                                                             
|   
|(6) | Includes 10,000 units receivable upon the exercise of a
    unit option that is exercisable within 60 days of the date
    of the table set forth above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(7) | Includes 10,144,585 units beneficially owned by Quantum Energy
    Partners and its affiliated entities which could be deemed to be
    beneficially owned by our Chairman, Toby R. Neugebauer, a
    principal of Quantum Energy Partners, as to which
    Mr. Neugebauer disclaims beneficial ownership in excess of
    his indirect pecuniary interest. Also includes an aggregate of
    30,000 units receivable upon the exercise of options that
    are held by certain of our directors and that are exercisable
    within 60 days of the date of the table set forth above.
    Excludes 475,622 units beneficially owned by
    Mr. Merriam.                                                          

67



---



##### 



Equity Compensation Plan Information




Long-Term Incentive Plan






Unit Grants.


Unit Options.




Restricted Units.




68



---



##### 







Phantom Units.






Unit Appreciation Rights.


69



---



##### 








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

Stakeholders Agreement






| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | the redemption and/or exchange, as applicable, of their
    respective membership interests in us;
|
| |  | certain corporate governance matters; and                                                         
|
| |  | registration rights for the benefit of certain of our affiliates.                                 



Redemption and Equity Exchange.




|                                   |  |                        |                    | 
|---------------------------------- |  | ---------------------- | ------------------ | 
|                                   |  | Consideration          |                   
|                                   |  | Received in Redemption |                   
|                                   |  | Transactions and       |                   
|Pre-Offering Member                |  | Equity Exchange        |                   
|                                   |  |                        |                   
|Quantum Energy Partners(1)         |  | $                      | 108.6 million cash | 
|                                   |  |                        | 10,144,585 units   | 
|Non-affiliated equity investors(1) |  | $                      | 2.8 million cash   | 
|                                   |  |                        | 261,185 units      | 
|Michael C. Linn                    |  | $                      | 3.0 million cash   | 
|                                   |  |                        | 3,662,122 units    | 
|Gerald W. Merriam                  |  |                        | 475,622 units      | 
|Roland P. Keddie                   |  |                        | 475,622 units      | 






|    |                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts shown give effect to the redemption of a portion of such
    members units with the proceeds received by the Company
    pursuant to the exercise by the underwriters of their over
    allotment option.

Registration Rights.


Other




70



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##### 










|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services





Audit Fees:


Audit-Related Fees:


Tax Fees:


All Other Fees:


Audit Committee Pre-Approval Policies and Practices







PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

(a)(1) and (2) Financial Statements




(a)(3)Exhibits






71



---



##### 



EXHIBIT INDEX


|               |    |     |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                              
|-------------- | -- | --- |  | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |    |     |  | Description
|               |    |     |  |            
|               | 3  | .1  |  |            |  | Certificate of Formation of Linn Energy Holdings, LLC (now Linn
    Energy, LLC) (incorporated herein by reference to
    Exhibit 3.1 to the Registration Statement on Form S-1
    (File No. 333-125501) filed by Linn Energy, LLC on
    June 30, 2005) (the Form S-1)                                                                                                                                   
|               | 3  | .2  |  |            |  | Certificate of Amendment to Certificate of Formation of Linn
    Energy Holdings, LLC (now Linn Energy, LLC) (incorporated herein
    by reference to Exhibit 3.2 to the Form S-1)                                                                                                                                                                                                                           
|               | 3  | .3  |  |            |  | Second Amended and Restated Limited Liability Company Agreement
    of Linn Energy, LLC (incorporated herein by reference to
    Exhibit 3.1 to the Current Report on Form 8-K filed by
    Linn Energy, LLC on January 19, 2006)                                                                                                                                                                            
|               | 4  | .1* |  |            |  | Form of specimen unit certificate for the units of Linn Energy,
    LLC                                                                                                                                                                                                                                                                                                                                      
|               | 10 | .1  |  |            |  | Credit Agreement dated as of April 11, 2005, among Linn
    Energy, LLC (f/k/a Linn Energy Holdings, LLC), the Lenders from
    time to time party thereto, BNP Paribas, as administrative
    agent, and Royal Bank of Canada, as syndication agent
    (incorporated herein by reference to Exhibit 10.1 to the
    Form S-1)                                                                              
|               | 10 | .2  |  |            |  | First Amendment and Consent to Credit Agreement dated as of
    May 3, 2005, among Linn Energy, LLC (f/k/a Linn Energy
    Holdings, LLC), the Guarantors signatory thereto, the Lenders
    signatory thereto and BNP Paribas, as administrative agent
    (incorporated herein by reference to Exhibit 10.2 to the
    Form S-1)                                                                           
|               | 10 | .3  |  |            |  | Second Amendment to Credit Agreement dated as of August 12,
    2005, among Linn Energy, LLC, the Guarantors signatory thereto,
    the Lenders signatory thereto and BNP Paribas, as administrative
    agent (incorporated herein by reference to Exhibit 10.3 to
    Amendment No. 1 to the Registration Statement on
    Form S-1 filed by Linn Energy, LLC on September 19,
    2005 (Amendment No. 1)
|               | 10 | .4  |  |            |  | Letter Agreement dated as of August 24, 2005, among Linn
    Energy, LLC, the Lenders signatory thereto and BNP Paribas, as
    administrative agent (incorporated herein by reference to
    Exhibit 10.4 to Amendment No. 1)                                                                                                                                                                               
|               | 10 | .5  |  |            |  | Third Amendment to Credit Agreement dated as of October 27,
    2005, among Linn Energy, LLC, the Guarantors signatory thereto,
    the Lenders signatory thereto and BNP Paribas, as administrative
    agent (incorporated herein by reference to Exhibit 10.5 to
    Amendment No. 2 to the Registration Statement on
    Form S-1 filed by Linn Energy, LLC on October 31, 2005
    (Amendment No. 2)) 
|               | 10 | .6  |  |            |  | Fourth Amendment to Credit Agreement dated as of
    December 19, 2005, among Linn Energy, LLC, the Guarantors
    signatory thereto, the Lenders signatory thereto and BNP
    Paribas, as administrative agent (incorporated herein by
    reference to Exhibit 10.6 to Amendment No. 5 to the
    Registration Statement on Form S-1 filed by Linn Energy,
    LLC on January 3, 2006 (Amendment No. 5) 
|               | 10 | .7  |  |            |  | Second Lien Senior Subordinated Term Loan Agreement dated as of
    October 27, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as administrative agent, Societe Generale, as
    syndication agent, and the Lenders signatory thereto
    (incorporated herein by reference to Exhibit 10.6 to
    Amendment No. 2)                                                                                 
|               | 10 | .8  |  |            |  | First Amendment to Credit Agreement and Consent dated as of
    November 22, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as administrative agent, and the Lenders signatory
    thereto (incorporated herein by reference to Exhibit 10.7
    to Amendment No. 3 to the Registration Statement on
    Form S-1 filed by Linn Energy, LLC on November 25,
    2005 (Amendment No. 3))           
|               | 10 | .9  |  |            |  | Second Amendment to Credit Agreement and Consent dated as of
    December 19, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as administrative agent, and the Lenders signatory
    thereto (incorporated herein by reference to Exhibit 10.9
    to Amendment No. 5)                                                                                                                               
|               | 10 | .10 |  |            |  | Intercreditor and Subordination Agreement dated as of
    October 27, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as subordinated administrative agent, and BNP Paribas,
    as administrative agent for the senior revolving lenders
    (incorporated herein by reference to Exhibit 10.7 to
    Amendment No. 2)                                                                              

72



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##### 



|               |    |      |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------- | -- | ---- |  | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |    |      |  | Description
|               |    |      |  |            
|               | 10 | .11  |  |            |  | Form of Asset Purchase Agreement dated as of October 1,
    2005, between Exploration Partners, LLC and others, as Seller,
    and Linn Energy Holdings, LLC and others, as Purchaser
    (incorporated herein by reference to Exhibit 10.8 to
    Amendment No. 2)                                                                                                                                                                                            
|               | 10 | .12 |  |            |  | Form of Linn Energy, LLC Long-Term Incentive Plan (incorporated
    herein by reference to Exhibit 10.10 to Amendment
    No. 4 to the Registration Statement on Form S-1 filed
    by Linn Energy, LLC on December 14, 2005 (Amendment
    No. 4))                                                                                                                                                                                                          
|               | 10 | .13 |  |            |  | Form of Unit Option Agreement pursuant to the Linn Energy, LLC
    Long-Term Inceptive Plan (incorporated herein by reference to
    Exhibit 10.2 to the Current Report on Form 8-K filed
    by Linn Energy, LLC on February 21, 2006)                                                                                                                                                                                                                        
|               | 10 | .14  |  |            |  | Stakeholders Agreement (incorporated herein by reference
    to Exhibit 10.4 to Form S-1)                                                                                                                                                                                                                                                                                                                                                                     
|               | 10 | .15 |  |            |  | Amended and Restated Employment Agreement, dated as of
    December 14, 2005 between Linn Operating, Inc. and Michael
    C. Linn (incorporated herein by reference to Exhibit 10.12
    to Amendment No. 4)                                                                                                                                                                                                                                                   
|               | 10 | .16 |  |            |  | Second Amended and Restated Employment Agreement, dated as of
    September 15, 2005 between Linn Operating, Inc. and Kolja
    Rockov (incorporated herein by reference to Exhibit 10.12
    to Amendment No. 2)                                                                                                                                                                                                                                              
|               | 10 | .17  |  |            |  | Memorandum of Understanding Regarding Compensation Arrangements
    for Members of the Linn Energy, LLC Board of Directors
    (incorporated herein by reference to Exhibit 10.1 to the
    Current Report on Form 8-K filed by Linn Energy, LLC on
    February 21, 2006)                                                                                                                                                                                     
|               | 10 | .18 |  |            |  | Employment Agreement, dated effective as of April 3, 2006
    between Linn Operating, Inc. and Thomas A. Lopus
    (incorporation herein by reference to Exhibit 10.1 to the
    current Report on Form 8-K filed by Linn Energy, LLC on
    April 18, 2006 (the April 18, 2006
    Form 8-K)                                                                                                                                                                
|               | 10 | .19 |  |            |  | Linn Energy, LLC Long-Term Incentive Plan Restricted Unit
    Agreement, dated effective as of April 13, 2006 between
    Linn Energy, LLC and Thomas A. Lopus (incorporated herein
    by reference to Exhibit 10.2 to the April 18, 2006
    Form 8-K)                                                                                                                                                                                                       
|               | 10 | .20 |  |            |  | Linn Energy, LLC Long-Term Incentive Plan Option Agreement,
    dated effective as of April 13, 2006 between Linn Energy,
    LLC and Thomas A. Lopus (incorporated herein by reference
    to Exhibit 10.3 to the April 18, 2006 Form 8-K)                                                                                                                                                                                                                    
|               | 10 | .21 |  |            |  | Separation Agreement and General Release, dated effective as of
    April 7, 2006 between Linn Energy, LLC and its subsidiaries
    and Gerald Merriam (incorporated herein by reference to
    Exhibit 10.4 to the April 18, 2006 Form 8-K)                                                                                                                                                                                                                   
|               | 10 | .22  |  |            |  | Amended and Restated Credit Agreement dated as of April 7,
    2006 among Linn Energy, as borrower, BNP Paribas, as
    administration agent, Royal Bank of Canada and Societe Generale,
    as Syndication agents, Bank of America, N.A. and America Bank,
    as documentation agents, and lenders party thereto (incorporated
    herein by reference to Exhibit 10.1 to the Current Report
    on Form 8-K filed by Linn Energy, LLC on April 13,
    2006)
|               | 10 | .23* |  |            |  | First Amendment to Amended and Restated Credit Agreement among
    Linn Energy, LLC as Borrower, BNP Paribas, as
    Administrative Agent, and the Lender signatory thereto,
    effective as of May 5, 2006                                                                                                                                                                                                                                                   
|               | 21 | .1*  |  |            |  | List of subsidiaries of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                                                                                                       
|               | 23 | .1*  |  |            |  | Consent of KPMG, LLP for Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                                                                                                      
|               | 23 | .2*  |  |            |  | Consent of Schlumberger Data and Consulting Services                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 31 | .1*  |  |            |  | Rule 13a-14(a)/15d-14(a) Certification of Michael C. Linn,
    President and Chief Executive Officer of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                       
|               | 31 | .2*  |  |            |  | Rule 13a-14(a)/15d-14(a) Certification of Kolja Rockov,
    Executive Vice President and Chief Financial Officer of Linn
    Energy, LLC                                                                                                                                                                                                                                                                                                                       
|               | 32 | .1*  |  |            |  | Section 1350 Certification of Michael C. Linn, President
    and Chief Executive Officer of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                                   
|               | 32 | .2*  |  |            |  | Section 1350 Certification of Kolja Rockov, Executive Vice
    President and Chief Financial Officer of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                       






| |   |                
| | - | ---------------
| | * | Filed herewith.



| |   |                                                         
| | - | --------------------------------------------------------
| |  | Management contract or compensatory plan or arrangement.

73



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##### 






SIGNATURES






| |                 
| | ----------------
| | LINN ENERGY, LLC



| |     |                    
| | --- | -------------------
| | By: | /s/ MICHAEL C. LINN

| |                        
| | -----------------------
| |                        
| | Michael C. Linn        
| | President and          
| | Chief Executive Officer



| |     |                 
| | --- | ----------------
| | By: | /s/ KOLJA ROCKOV

| |                             
| | ----------------------------
| |                             
| | Kolja Rockov                
| | Executive Vice President and
| | Chief Financial Officer     



|                                                 |  |                                                                                            |  |              |  | 
|------------------------------------------------ |  | ------------------------------------------------------------------------------------------ |  | ------------ |  | 
|Signature                                        |  | Title                                                                                      |  | Date        
|                                                 |  |                                                                                            |  |             
|                                                
|/s/ MICHAEL C. LINNMichael
    C. Linn           |  | President and
    Chief Executive Officer
    (Principal Executive Officer)                |  | May 31, 2006
|                                                
|/s/ KOLJA ROCKOVKolja
    Rockov                 |  | Executive Vice President and
    Chief Financial Officer
    (Principal Financial Officer) |  | May 31, 2006
|                                                
|/s/ DONALD T. ROBINSONDonald
    T. Robinson     |  | Chief Accounting Officer
    (Principal Accounting Officer)                                |  | May 31, 2006
|                                                
|/s/ TOBY R. NEUGEBAUERToby R. Neugebauer         |  | Chairman                                                                                   |  | May 31, 2006
|                                                
|/s/ GEORGE A. ALCORNGeorge A. Alcorn             |  | Independent Director                                                                       |  | May 31, 2006
|                                                
|/s/ TERRENCE S. JACOBSTerrence S. Jacobs         |  | Independent Director                                                                       |  | May 31, 2006
|                                                
|/s/ JEFFREY C.
    SWOVELANDJeffrey C. Swoveland |  | Independent Director                                                                       |  | May 31, 2006

74



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##### 



INDEX TO FINANCIAL STATEMENTS


|                                                                                                                                                                                  |  |      |     | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                                                  |  | Page |    
|                                                                                                                                                                                  |  |      |    
|Linn Energy, LLC and Subsidiaries                                                                                                                                                 |  |      |     | 
|Report of Independent Registered Public
    Accounting Firm                                                                                                                       |  |      | F-2 | 
|Consolidated Balance Sheets, as of
    December 31, 2004 and 2005                                                                                                                 |  |      | F-3 | 
|Consolidated Statements of Operations, for
    the period from March 14, 2003 (Inception) to
    December 31, 2003 and years ended December 31, 2004
    and 2005                 |  |      | F-5 | 
|Consolidated Statements of Members
    Capital (Deficit), for the period from March 14, 2003
    (Inception) to December 31, 2003 and years ended
    December 31, 2004 and 2005 |  |      | F-6 | 
|Consolidated Statements of Cash Flows, for
    the period from March 14, 2003 (Inception) to
    December 31, 2003 and years ended December 31, 2004
    and 2005                 |  |      | F-7 | 
|Notes to Consolidated Financial Statements,
    December 31, 2003, 2004 and 2005                                                                                                  |  |      | F-8 | 

F-1



---



##### 






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






















F-2



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES





CONSOLIDATED BALANCE SHEETS


AS OF DECEMBER 31, 2004 AND 2005


|                                                                                     |                                                            |                                                                                                         |                      |              |           |           |             |             |            |            |             | 
|------------------------------------------------------------------------------------ | ---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | -------------------- | ------------ | --------- | --------- | ----------- | ----------- | ---------- | ---------- | ----------- | 
|                                                                                     |                                                            | As of December 31,                                                                                      |                     
|                                                                                     |                                                            |                                                                                                         |                     
|                                                                                     |                                                            | 2004                                                                                                    |                      |              |          
|                                                                                     |                                                            | (Restated)                                                                                              |                      |              | 2005      |          
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|Assets                                                                              
|Current assets:                                                                      |                                                            |                                                                                                         |                      |              |           |           |             |            
|                                                                                     | Cash and cash equivalents                                  |                                                                                                         | $                    | 2,188,244    |           |           | $           | 11,041,346  |           
|                                                                                     | Receivables:                                               |                                                                                                         |                      |              |           |           |             |             |           
|                                                                                     |                                                            | Natural gas and oil, net of allowance for doubtful accounts of
    $50,000 in 2004 and $100,000 in 2005 |                      |              | 5,462,775 |           |             |             | 17,103,422 |           
|                                                                                     |                                                            | Other                                                                                                   |                      |              | 82,539    |           |             |             | 650,168    |           
|                                                                                     | Fair value of interest rate swaps (note 3)                 |                                                                                                         |                      |             |           |           |             | 201,938     |           
|                                                                                     | Inventory                                                  |                                                                                                         |                      | 109,985      |           |           |             | 67,513      |           
|                                                                                     | Current portion of natural gas derivatives (note 8)        |                                                                                                         |                      | 142,960      |           |           |             | 1,601,495   |           
|                                                                                     | Prepaid expenses and other current assets                  |                                                                                                         |                      | 93,782       |           |           |             | 4,067,309   |           
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         | Total current assets |              |           | 8,080,285 |             |             |            | 34,733,191 |            
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|Natural gas and oil properties (successful efforts accounting
    method) (note 13): |                                                            |                                                                                                         |                      |              |           |           |             |            
|                                                                                     | Natural gas and oil properties and related equipment       |                                                                                                         |                      | 97,772,698   |           |           |             | 243,985,544 |           
|                                                                                     | Pipelines                                                  |                                                                                                         |                      | 1,536,878    |           |           |             | 5,579,920   |           
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         | 99,309,576           |              |           |           | 249,565,464 |            
|                                                                                     | Less accumulated depreciation, depletion, and amortization |                                                                                                         |                      | 3,928,802    |           |           |             | 10,707,358  |           
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         | 95,380,774           |              |           |           | 238,858,106 |            
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|Property, plant, and equipment:                                                      |                                                            |                                                                                                         |                      |              |           |           |             |            
|                                                                                     | Land                                                       |                                                                                                         |                      | 47,500       |           |           |             | 202,500     |           
|                                                                                     | Buildings and leasehold improvements                       |                                                                                                         |                      | 468,600      |           |           |             | 607,776     |           
|                                                                                     | Vehicles                                                   |                                                                                                         |                      | 689,892      |           |           |             | 1,317,362   |           
|                                                                                     | Furniture and equipment                                    |                                                                                                         |                      | 342,487      |           |           |             | 888,194     |           
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         | 1,548,479            |              |           |           | 3,015,832   |            
|                                                                                     | Less accumulated depreciation                              |                                                                                                         |                      | 161,724      |           |           |             | 490,717     |           
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         | 1,386,755            |              |           |           | 2,525,115   |            
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|Other assets:                                                                        |                                                            |                                                                                                         |                      |              |           |           |             |            
|                                                                                     | Prepaid drilling costs                                     |                                                                                                         |                      | 362,095      |           |           |             | 434,801     |           
|                                                                                     | Equity investment                                          |                                                                                                         |                      | 69,685       |           |           |             |            |           
|                                                                                     | Long-term portion of natural gas derivatives (note 8)      |                                                                                                         |                      | 34,562       |           |           |             | 2,794,796   |           
|                                                                                     | Operating bonds                                            |                                                                                                         |                      | 110,699      |           |           |             | 197,867     |           
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         | 577,041              |              |           |           | 3,427,464   |            
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          
|                                                                                     |                                                            |                                                                                                         |                      | Total assets |           | $         | 105,424,855 |             |            | $          | 279,543,876 | 
|                                                                                     |                                                            |                                                                                                         |                      |              |           |          



F-3



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


AS OF DECEMBER 31, 2004 AND 2005


|                                           |                                                       |                                                  |           |            |             |             |             |                |             |   |            |             |   | 
|------------------------------------------ | ----------------------------------------------------- | ------------------------------------------------ | --------- | ---------- | ----------- | ----------- | ----------- | -------------- | ----------- | - | ---------- | ----------- | - | 
|                                           |                                                       | As of December 31,                               |          
|                                           |                                                       |                                                  |          
|                                           |                                                       | 2004                                             |           |            |            
|                                           |                                                       | (Restated)                                       |           |            | 2005        |             |             | 2005 Pro Forma |            
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|                                           |                                                       |                                                  |           |            |             | (Unaudited) |            
|                                           |                                                       |                                                  |           |            |             | (Note 18)   |            
|Liabilities and Members Capital (Deficit)
|Current liabilities:                       |                                                       |                                                  |           |            |             |             |             |                |             |   |            |            
|                                           | Current portion of long-term notes payable (note 10)  |                                                  | $         | 58,113     |             |             | $           | 112,904        |             |   |            |             |  
|                                           | Subordinated term loan (note 3)                       |                                                  |           |           |             |             |             | 59,501,375     |             |   |            |             |  
|                                           | Current portion of interest rate swaps (note 3)       |                                                  |           | 38,933     |             |             |             |               |             |   |            |             |  
|                                           | Accounts payable and accrued expenses                 |                                                  |           | 3,132,286  |             |             |             | 5,571,637      |             |   |            |             |  
|                                           | Current portion of natural gas derivatives (note 8)   |                                                  |           | 3,599,904  |             |             |             | 12,093,937     |             |   |            |             |  
|                                           | Revenue distribution                                  |                                                  |           | 2,493,145  |             |             |             | 6,081,978      |             |   |            |             |  
|                                           | Accrued interest payable (note 3)                     |                                                  |           | 411,245    |             |             |             | 1,447,721      |             |   |            |             |  
|                                           | Gas purchases payable                                 |                                                  |           | 481,993    |             |             |             | 1,207,710      |             |   |            |             |  
|                                           | Other current liabilities                             |                                                  |           |           |             |             |             | 40,552         |             |   |            |             |  
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|                                           |                                                       | Total current liabilities                        |           |            | 10,215,619  |             |             |                | 86,057,814  |   |            |             |   | 
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|Long-term liabilities:                     |                                                       |                                                  |           |            |             |             |             |                |             |   |            |            
|                                           | Long-term portion of notes payable (note 10)          |                                                  |           | 539,867    |             |             |             | 694,815        |             |   |            |             |  
|                                           | Credit facility (note 3)                              |                                                  |           | 72,210,107 |             |             |             | 206,118,790    |             |   |            |             |  
|                                           | Long-term portion of interest rate swaps (note 3)     |                                                  |           | 1,408,629  |             |             |             | 662,916        |             |   |            |             |  
|                                           | Asset retirement obligation (note 11)                 |                                                  |           | 3,856,584  |             |             |             | 5,442,612      |             |   |            |             |  
|                                           | Long-term portion of natural gas derivatives (note 8) |                                                  |           | 7,674,117  |             |             |             | 27,139,353     |             |   |            |             |  
|                                           | Other long-term liabilities                           |                                                  |           |           |             |             |             | 258,480        |             |   |            |             |  
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|                                           |                                                       | Total long-term liabilities                      |           |            | 85,689,304  |             |             |                | 240,316,966 |   |            |             |   | 
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|                                           |                                                       | Total liabilities                                |           |            | 95,904,923  |             |             |                | 326,374,780 |   |            |             |   | 
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|Members capital (deficit):                |                                                       |                                                  |           |            |             |             |             |                |             |   |            |            
|                                           | Members capital                                      |                                                  |           | 16,023,743 |             |             |             | 16,023,743     |             |   | $          | 140,023,743 |  
|                                           | Accumulated loss                                      |                                                  |           | (6,503,811 | )           |             |             | (62,854,647    | )           |   |            | (64,854,647 | )
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|                                           |                                                       |                                                  | 9,519,932 |            |             |             | (46,830,904 | )              |             | $ | 75,169,096 |            
|                                           |                                                       |                                                  |           |            |             |             |             |                |            
|                                           |                                                       | Total liabilities and members capital (deficit) |           | $          | 105,424,855 |             |             | $              | 279,543,876 |   |            |             |   | 
|                                           |                                                       |                                                  |           |            |             |             |             |                |            



F-4



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE PERIOD


FROM MARCH 14, 2003 (INCEPTION) TO
DECEMBER 31, 2003


AND YEARS ENDED DECEMBER 31, 2004 AND 2005


|                                                |                                                          |                |            |            |                         |   |            |            |            |   |             |             |             |  
|----------------------------------------------- | -------------------------------------------------------- | -------------- | ---------- | ---------- | ----------------------- | - | ---------- | ---------- | ---------- | - | ----------- | ----------- | ----------- | -
|                                                |                                                          | Period from    |            |            |                         |   |           
|                                                |                                                          | March 14,      |            |            |                         |   |           
|                                                |                                                          | 2003           |            |            |                        
|                                                |                                                          | (inception) to |            |            | Year Ended December 31, |  
|                                                |                                                          | December 31,   |            |            |                         |  
|                                                |                                                          | 2003           |            |            | 2004                    |   |            |           
|                                                |                                                          | (Restated)     |            |            | (Restated)              |   |            | 2005       |           
|                                                |                                                          |                |            |            |                         |   |            |            |           
|Revenues:                                       |                                                          |                |            |            |                         |   |            |            |            |   |             |            
|                                                | Natural gas and oil sales                                |                | $          | 2,379,301  |                         |   | $          | 19,502,114 |            |   | $           | 44,644,593  |            
|                                                | Realized gain (loss) on natural gas derivatives (note 8) |                |            | 162,890    |                         |   |            | (2,239,506 | )          |   |             | (51,417,870 | )          
|                                                | Unrealized (loss) on natural gas derivatives (note 8)    |                |            | (1,599,854 | )                       |   |            | (8,764,855 | )          |   |             | (24,775,625 | )          
|                                                | Natural gas marketing revenue                            |                |            |           |                         |   |            | 520,340    |            |   |             | 4,722,587   |            
|                                                | Other revenue                                            |                |            | 3,778      |                         |   |            | 160,131    |            |   |             | 345,449     |            
|                                                |                                                          |                |            |            |                         |   |            |            |           
|                                                |                                                          |                | 946,115    |            |                         |   | 9,178,224  |            |            |   | (26,480,866 | )          
|                                                |                                                          |                |            |            |                         |   |            |            |           
|Expenses:                                       |                                                          |                |            |            |                         |   |            |            |            |   |             |            
|                                                | Operating expenses                                       |                |            | 798,236    |                         |   |            | 4,756,071  |            |   |             | 7,356,134   |            
|                                                | Natural gas marketing expense                            |                |            |           |                         |   |            | 481,993    |            |   |             | 4,400,845   |            
|                                                | General and administrative expenses                      |                |            | 782,849    |                         |   |            | 1,487,964  |            |   |             | 3,331,924   |            
|                                                | Depreciation, depletion and amortization                 |                |            | 562,446    |                         |   |            | 3,656,332  |            |   |             | 7,293,832   |            
|                                                |                                                          |                |            |            |                         |   |            |            |           
|                                                |                                                          |                | 2,143,531  |            |                         |   | 10,382,360 |            |            |   | 22,382,735  |            
|                                                |                                                          |                |            |            |                         |   |            |            |           
|                                                |                                                          |                | (1,197,416 | )          |                         |   | (1,204,136 | )          |            |   | (48,863,601 | )          
|                                                |                                                          |                |            |            |                         |   |            |            |           
|Other income and (expenses):                    |                                                          |                |            |            |                         |   |            |            |            |   |             |            
|                                                | Interest income                                          |                |            | 34,139     |                         |   |            | 7,379      |            |   |             | 47,157      |            
|                                                | Interest and financing expense (note 3)                  |                |            | (516,883   | )                       |   |            | (3,530,360 | )          |   |             | (7,039,556  | )          
|                                                | Loss from equity investment                              |                |            | (2,929     | )                       |   |            | (56,126    | )          |   |             | (16,714     | )          
|                                                | Write-off of deferred financing fees (note 3)            |                |            |           |                         |   |            |           |            |   |             | (364,166    | )          
|                                                | (Loss) on sale of assets                                 |                |            | (4,916     | )                       |   |            | (32,563    | )          |   |             | (39,492     | )          
|                                                |                                                          |                |            |            |                         |   |            |            |           
|                                                |                                                          |                | (490,589   | )          |                         |   | (3,611,670 | )          |            |   | (7,412,771  | )          
|                                                |                                                          |                |            |            |                         |   |            |            |           
|Loss before income taxes                        |                                                          |                | (1,688,005 | )          |                         |   | (4,815,806 | )          |            |   | (56,276,372 | )          
|                                                | Income tax (provision) (note 4)                          |                |            |           |                         |   |            |           |            |   |             | (74,464     | )          
|                                                |                                                          |                |            |            |                         |   |            |            |           
|                                                |                                                          | Net (loss)     |            | $          | (1,688,005              | ) |            | $          | (4,815,806 | ) |             | $           | (56,350,836 | )
|                                                |                                                          |                |            |            |                         |   |            |            |           
|Pro forma (loss) per unit (unaudited) (note 18) |                                                          |                |            |            |                         |   |            |            |            |   |             |            
|                                                | Pro forma (loss) per unit                                |                | $          | (0.06      | )                       |   | $          | (0.17      | )          |   | $           | (2.03       | )          
|                                                | Pro forma units outstanding                              |                |            | 27,812,500 |                         |   |            | 27,812,500 |            |   |             | 27,812,500  |            
|                                                |                                                          |                |            |            |                         |   |            |            |           



F-5



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF MEMBERS CAPITAL (DEFICIT)


FOR THE PERIOD


FROM MARCH 14, 2003 (INCEPTION) TO
DECEMBER 31, 2003


AND YEARS ENDED DECEMBER 31, 2004 AND 2005


|                                                                                        |  |          |            |   |             |   |             |                   |  |   |             |  
|--------------------------------------------------------------------------------------- |  | -------- | ---------- | - | ----------- | - | ----------- | ----------------- |  | - | ----------- | -
|                                                                                        |  | Members |            |   | Accumulated |   |             | Total Members    | 
|                                                                                        |  | Capital  |            |   | Loss        |   |             | Capital (Deficit) | 
|                                                                                        |  |          |            |   |             |   |             |                   | 
|Contributions                                                                           |  | $        | 16,323,743 |   |             | $ |            |                   |  | $ | 16,323,743  |  
|Return of capital (note 5)                                                              |  |          | (300,000   | ) |             |   |            |                   |  |   | (300,000    | )
|Net loss for period from March 14, 2003 (inception) to
    December 31, 2003 (restated) |  |          |           |   |             |   | (1,688,005  | )                 |  |   | (1,688,005  | )
|                                                                                        |  |          |            |   |             |   |             |                   | 
|Balance as of December 31, 2003 (restated)                                              |  |          | 16,023,743 |   |             |   | (1,688,005  | )                 |  |   | 14,335,738  |  
|Net loss for year ended December 31, 2004 (restated)                                    |  |          |           |   |             |   | (4,815,806  | )                 |  |   | (4,815,806  | )
|                                                                                        |  |          |            |   |             |   |             |                   | 
|Balance as of December 31, 2004 (restated)                                              |  |          | 16,023,743 |   |             |   | (6,503,811  | )                 |  |   | 9,519,932   |  
|Net loss for the year ended December 31, 2005                                           |  |          |           |   |             |   | (56,350,836 | )                 |  |   | (56,350,836 | )
|                                                                                        |  |          |            |   |             |   |             |                   | 
|Balance as of December 31, 2005                                                         |  | $        | 16,023,743 |   |             | $ | (62,854,647 | )                 |  | $ | (46,830,904 | )
|                                                                                        |  |          |            |   |             |   |             |                   | 



F-6



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE PERIOD FROM MARCH 14, 2003
(INCEPTION) TO


DECEMBER 31, 2003 AND YEARS ENDED DECEMBER 31, 2004
AND 2005


|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |              |            |             |              |  
|----------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | ----------------------- | ---------- | ----------- | ----------- | --------- | ---------- | ----------- | ------------ | ---------- | ----------- | ------------ | -
|                                                      |                                                                                                                             | Period from                                   |                                                          |                                                     |                         |            |            
|                                                      |                                                                                                                             | March 14,                                     |                                                          |                                                     |                         |            |            
|                                                      |                                                                                                                             | 2003                                          |                                                          |                                                     |                        
|                                                      |                                                                                                                             | (inception) to                                |                                                          |                                                     | Year Ended December 31, |           
|                                                      |                                                                                                                             | December 31,                                  |                                                          |                                                     |                         |           
|                                                      |                                                                                                                             | 2003                                          |                                                          |                                                     | 2004                    |            |             |            
|                                                      |                                                                                                                             | (Restated)                                    |                                                          |                                                     | (Restated)              |            |             | 2005        |          
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|Cash flow from operating activities:                  |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |             
|                                                      | Net (loss)                                                                                                                  |                                               | $                                                        | (1,688,005                                          | )                       |            | $           | (4,815,806  | )         |            | $           | (56,350,836  | )         
|                                                      | Adjustments to reconcile net (loss) to net cash provided by
    (used in) operating activities:                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |              |           
|                                                      |                                                                                                                             | Depreciation, depletion and amortization      |                                                          |                                                     | 562,446                 |            |             |             | 3,656,332 |            |             |              | 7,293,832  |            
|                                                      |                                                                                                                             | Amortization of deferred financing fees       |                                                          |                                                     | 20,454                  |            |             |             | 123,403   |            |             |              | 455,165    |            
|                                                      |                                                                                                                             | Write-off of deferred financing fees          |                                                          |                                                     |                        |            |             |             |          |            |             |              | 364,166    |            
|                                                      |                                                                                                                             | Loss on sale of assets                        |                                                          |                                                     | 4,916                   |            |             |             | 32,563    |            |             |              | 39,492     |            
|                                                      |                                                                                                                             | Loss from equity investment                   |                                                          |                                                     | 2,929                   |            |             |             | 56,126    |            |             |              | 16,714     |            
|                                                      |                                                                                                                             | Accretion of asset retirement obligation      |                                                          |                                                     | 14,683                  |            |             |             | 73,501    |            |             |              | 172,426    |            
|                                                      |                                                                                                                             | Unrealized loss on natural gas derivatives    |                                                          |                                                     | 1,599,854               |            |             |             | 8,764,855 |            |             |              | 24,775,625 |            
|                                                      |                                                                                                                             | Unrealized loss (gain) on interest rate swaps |                                                          |                                                     | 188,928                 |            |             |             | 1,258,634 |            |             |              | (986,584   | )          
|                                                      |                                                                                                                             | Changes in assets and liabilities:            |                                                          |                                                     |                         |            |             |             |           |            |             |              |            |            
|                                                      |                                                                                                                             |                                               | (Increase) in accounts receivable                        |                                                     |                         | (1,780,602 | )           |             |           | (3,724,712 | )           |              |            | (12,208,276 | )           
|                                                      |                                                                                                                             |                                               | (Increase) decrease in inventory                         |                                                     |                         |           |             |             |           | (179       | )           |              |            | 42,472      |             
|                                                      |                                                                                                                             |                                               | (Increase) decrease in prepaid expenses and other assets |                                                     |                         | (98,972    | )           |             |           | 5,190      |             |              |            | (441,619    | )           
|                                                      |                                                                                                                             |                                               | Increase in accounts payable and accrued expenses        |                                                     |                         | 257,698    |             |             |           | 1,562,839  |             |              |            | 2,670,232   |             
|                                                      |                                                                                                                             |                                               | (Decrease) increase in natural gas derivatives           |                                                     |                         | (27,700    | )           |             |           | 759,490    |             |              |            | (1,035,125  | )           
|                                                      |                                                                                                                             |                                               | Increase in revenue distribution                         |                                                     |                         | 583,794    |             |             |           | 1,909,351  |             |              |            | 3,588,833   |             
|                                                      |                                                                                                                             |                                               | Increase in asset retirement obligation                  |                                                     |                         | 2,299      |             |             |           | 18,754     |             |              |            | 24,439      |             
|                                                      |                                                                                                                             |                                               | Increase in accrued interest payable                     |                                                     |                         | 222,594    |             |             |           | 188,651    |             |              |            | 1,036,476   |             
|                                                      |                                                                                                                             |                                               | Increase in other liabilities                            |                                                     |                         |           |             |             |           |           |             |              |            | 299,032     |             
|                                                      |                                                                                                                             |                                               | Increase in gas purchases payable                        |                                                     |                         |           |             |             |           | 481,993    |             |              |            | 725,717     |             
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|                                                      |                                                                                                                             |                                               |                                                          | Net cash provided by (used in) operating activities |                         |            | (134,684    | )           |           |            | 10,350,985  |              |            |             | (29,517,819  | )
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|Cash flow from investing activities:                  |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |             
|                                                      | Acquisition and development of natural gas and oil properties                                                               |                                               |                                                          | (32,453,799                                         | )                       |            |             | (62,074,739 | )         |            |             | (149,210,712 | )         
|                                                      | Purchases of property and equipment                                                                                         |                                               |                                                          | (409,613                                            | )                       |            |             | (1,518,966  | )         |            |             | (1,638,556   | )         
|                                                      | Proceeds from sale of assets                                                                                                |                                               |                                                          | 8,584                                               |                         |            |             | 334,037     |           |            |             | 115,130      |           
|                                                      | (Increase) decrease in prepaid drilling cost                                                                                |                                               |                                                          | (2,300,643                                          | )                       |            |             | 1,938,548   |           |            |             | (72,706      | )         
|                                                      | Payments for operating bonds                                                                                                |                                               |                                                          | (75,342                                             | )                       |            |             | (35,357     | )         |            |             | (87,168      | )         
|                                                      | Purchase of equity investment                                                                                               |                                               |                                                          | (113,242                                            | )                       |            |             | (15,498     | )         |            |             | (3,625       | )         
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|                                                      |                                                                                                                             |                                               |                                                          | Net cash (used in) investing activities             |                         |            | (35,344,055 | )           |           |            | (61,371,975 | )            |            |             | (150,897,637 | )
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|Cash flow from financing activities:                  |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |             
|                                                      | Proceeds from notes payable                                                                                                 |                                               |                                                          |                                                    |                         |            |             | 604,358     |           |            |             | 65,294,952   |           
|                                                      | Principal payments on notes payable                                                                                         |                                               |                                                          |                                                    |                         |            |             | (6,378      | )         |            |             | (5,085,213   | )         
|                                                      | Principal payment on credit facility                                                                                        |                                               |                                                          |                                                    |                         |            |             |            |           |            |             | (75,605,000  | )         
|                                                      | Proceeds from credit facility                                                                                               |                                               |                                                          | 41,800,000                                          |                         |            |             | 30,805,000  |           |            |             | 210,000,000  |           
|                                                      | Deferred offering costs                                                                                                     |                                               |                                                          |                                                    |                         |            |             |            |           |            |             | (3,531,908   | )         
|                                                      | Deferred financing fees                                                                                                     |                                               |                                                          | (302,500                                            | )                       |            |             | (236,250    | )         |            |             | (1,804,273   | )         
|                                                      | Capital contributions by members                                                                                            |                                               |                                                          | 16,323,743                                          |                         |            |             |            |           |            |             |             |           
|                                                      | Return on capital                                                                                                           |                                               |                                                          | (300,000                                            | )                       |            |             |            |           |            |             |             |           
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|                                                      |                                                                                                                             |                                               |                                                          | Net cash provided by financing activities           |                         |            | 57,521,243  |             |           |            | 31,166,730  |              |            |             | 189,268,558  |  
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|                                                      |                                                                                                                             |                                               |                                                          | Net increase (decrease) in cash                     |                         |            | 22,042,504  |             |           |            | (19,854,260 | )            |            |             | 8,853,102    |  
|Cash and cash equivalents:                            |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |             
|                                                      | Beginning                                                                                                                   |                                               |                                                          |                                                    |                         |            |             | 22,042,504  |           |            |             | 2,188,244    |           
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|                                                      | Ending                                                                                                                      |                                               | $                                                        | 22,042,504                                          |                         |            | $           | 2,188,244   |           |            | $           | 11,041,346   |           
|                                                      |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |          
|                                                      |                                                                                                                             |                                               |                                                          | Cash payments for interest                          |                         | $          | 84,907      |             |           | $          | 1,959,672   |              |            | $           | 6,509,501    |  
|                                                      |                                                                                                                             |                                               |                                                          | Cash paid for income taxes                          |                         |            |            |             |           |            |            |              |            |             |             |  
|Supplemental disclosures of noncash flow information: |                                                                                                                             |                                               |                                                          |                                                     |                         |            |             |             |           |            |             |             
|                                                      | Increase in accounts payable related to acquisitions                                                                        |                                               | $                                                        | 407,839                                             |                         |            | $           | 903,910     |           |            |             |             |           
|                                                      | Increase in property acquisition payable                                                                                    |                                               |                                                          | 18,009,338                                          |                         |            |             |            |           |            |             |             |           
|                                                      | Increase in inventory related to acquisitions                                                                               |                                               |                                                          | 63,806                                              |                         |            |             | 46,000      |           |            |             |             |           
|                                                      | Increase in natural gas and oil properties and related asset
    retirement obligation due to acquisitions and new drilling |                                               |                                                          | 2,036,095                                           |                         |            |             | 1,711,252   |           |            |             | 1,389,163    |           



F-7



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


DECEMBER 31, 2003, 2004 AND 2005




|    |                                           
|--- | ------------------------------------------
|(1) | Summary of Significant Accounting Policies



|    |                                         
|--- | ----------------------------------------
|(a) | Organization and Description of Business





|    |                      
|--- | ---------------------
|(b) | Basis of Presentation





|    |                 
|--- | ----------------
|(c) | Cash Equivalents





|    |                          
|--- | -------------------------
|(d) | Trade Accounts Receivable





|    |          
|--- | ---------
|(e) | Inventory

first-in




|    |                               
|--- | ------------------------------
|(f) | Natural Gas and Oil Properties





F-8



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










property-by




|    |                                       
|--- | --------------------------------------
|(g) | Natural Gas and Oil Reserve Quantities









|    |                              
|--- | -----------------------------
|(h) | Property, Plant and Equipment



|                                     |  |  |             | 
|------------------------------------ |  |  | ----------- | 
|Buildings and leasehold improvements |  |  | 7-39  years | 
|Furniture and equipment              |  |  | 3-7 years   | 
|Vehicles                             |  |  | 5 years     | 

F-9



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |             
|--- | ------------
|(i) | Income Taxes







|    |                                              
|--- | ---------------------------------------------
|(j) | Derivative Instruments and Hedging Activities

 Accounting for Derivative
Instruments and Hedging Activities,




F-10



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                 
|--- | ----------------
|(k) | Use of Estimates





|    |                    
|--- | -------------------
|(l) | Revenue Recognition











F-11



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                    
|--- | -----------------------------------
|(m) | Fair Value of Financial Instruments





|    |                        
|--- | -----------------------
|(n) | Deferred Financing Fees





|    |                 
|--- | ----------------
|(o) | Members Capital







| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | the annual election of members of the Companys Board of
    Directors;                           
|
| |  | specified amendments to the Agreement;                                                            
|
| |  | the merger of the Company or the sale of all or substantially
    all of the Companys assets; and
|
| |  | the dissolution of the Company.                                                                   





|    |                     
|--- | --------------------
|(p) | Revenue Distribution





|    |                        
|--- | -----------------------
|(q) | Deferred Offering Costs





|    |                         
|--- | ------------------------
|(r) | Stock Based Compensation

 Share-Based
Payment


F-12



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


 Share-Based Payment,




|    |                  
|--- | -----------------
|(s) | Reclassifications





|    |                            
|--- | ---------------------------
|(t) | Recent Accounting Standards


Accounting for Conditional Asset Retirement Obligations.


 Accounting for
Suspended Well Costs. Financial Accounting and
Reporting by Oil and Gas Producing Companies


F-13



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Accounting Changes and Error Corrections, Accounting Changes, Reporting Accounting Changes
in Interim Financial Statements.




|    |                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(u) | As discussed in note 20, the Company restated its 2003,
    2004 and nine months ended September 30, 2004 and 2005
    consolidated financial statements.



|    |                   
|--- | ------------------
|(2) | Major Acquisitions





| |   |                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | On May 7, 2004, from Mountain V Oil and Gas, Inc.
    (Mountain V), 251 producing wells, tangible wellhead
    equipment, production facilities, and real estate in western
    Pennsylvania, for a restated purchase price of
    $12.5 million.                                            
|
| |  | On September 30, 2004, from Pentex Energy, Inc.
    (Pentex), 447 producing wells, operating rights, oil
    field equipment, vehicles, inventory, office equipment,
    furniture and fixtures, and real estate in western Pennsylvania,
    for a restated purchase price of $15.1 million.
|
| |  | On April 27, 2005, from Columbia Natural Resources, LLC
    (CNR), 38 producing wells, tangible wellhead
    equipment and a gathering system in West Virginia and western
    Virginia, for a purchase price of $4.4 million.                                                               
|
| |  | On August 31, 2005, from GasSearch Corporation
    (GasSearch), 130 producing wells and tangible
    wellhead equipment in West Virginia, for a purchase price of
    $5.4 million.                                                                                                          
|
| |  | On October 27, 2005, from Exploration Partners, LLC
    (Exploration Partners), 550 producing wells, oil
    field equipment and tangible wellhead equipment in West Virginia
    and Virginia, for a purchase price of $111.4 million.                                                      



|                               |  |                |        |   |        |   |        |     |  |             |           |   |  |          |       |   |  |   |         |  
|------------------------------ |  | -------------- | ------ | - | ------ | - | ------ | --- |  | ----------- | --------- | - |  | -------- | ----- | - |  | - | ------- | -
|                               |  |                |        |   |        |   |        |     |  | Exploration |          
|                               |  | Mountain V     |        |   | Pentex |   |        | CNR |  |             | GasSearch |   |  | Partners |      
|                               |  |                |        |   |        |   |        |     |  |             |           |   |  |          |      
|                               |  | (in thousands) |       
|Natural gas and oil receivable |  | $              | 658    |   |        | $ | 910    |     |  | $           |          |   |  | $        | 97    |   |  | $ | 2,418   |  
|Natural gas and oil properties |  |                | 12,225 |   |        |   | 14,373 |     |  |             | 4,396     |   |  |          | 5,422 |   |  |   | 111,081 |  
|Property, plant and equipment  |  |                | 230    |   |        |   | 503    |     |  |             |          |   |  |          |      |   |  |   | 307     |  
|Other assets                   |  |                |       |   |        |   | 265    |     |  |             |          |   |  |          |      |   |  |   |        |  
|Accounts payable               |  |                |       |   |        |   | (903   | )   |  |             |          |   |  |          | (13   | ) |  |   | (230    | )
|Asset retirement obligation    |  |                | (601   | ) |        |   | (1,070 | )   |  |             | (74       | ) |  |          | (200  | ) |  |   | (944    | )
|                               |  |                |        |   |        |   |        |     |  |             |           |   |  |          |      
|Net cash consideration         |  | $              | 12,512 |   |        | $ | 14,078 |     |  | $           | 4,322     |   |  | $        | 5,306 |   |  | $ | 112,632 |  
|                               |  |                |        |   |        |   |        |     |  |             |           |   |  |          |      

F-14



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                          |  |                         |        |   |                |   |        |             |  |   |           |   |  |   |         |  
|------------------------- |  | ----------------------- | ------ | - | -------------- | - | ------ | ----------- |  | - | --------- | - |  | - | ------- | -
|                          |  | Year Ended December 31, |       
|                          |  |                         |       
|                          |  | 2004 (Restated)         |        |   | 2005           |  
|                          |  |                         |        |   |                |  
|                          |  | As Reported             |        |   | Pro Forma      |   |        | As Reported |  |   | Pro Forma |  
|                          |  |                         |        |   |                |   |        |             |  |   |           |  
|                          |  | (In thousands)          |        |   | (In thousands) |  
|Natural gas and oil sales |  | $                       | 19,502 |   |                | $ | 35,900 |             |  | $ | 44,645    |   |  | $ | 59,533  |  
|                          |  |                         |        |   |                |   |        |             |  |   |           |  
|Net (loss)                |  | $                       | (4,816 | ) |                | $ | (7,029 | )           |  | $ | (56,351   | ) |  | $ | (55,129 | )
|                          |  |                         |        |   |                |   |        |             |  |   |           |  



|    |     
|--- | ----
|(3) | Debt



| |                
| | ---------------
| | Credit Facility











| |   |                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidated net income plus interest expense, income taxes,
    depreciation, depletion, amortization and other similar charges,
    minus all noncash income added to consolidated net income, and
    giving pro forma effect to any acquisitions or capital
    expenditures, to interest expense of not less than 2.5 to
    1.0; and
|
| |  | consolidated current assets, including the unused amount of the
    total commitments, to consolidated current liabilities of not
    less than 1.0 to 1.0, excluding non-cash assets and liabilities
    under SFAS No. 133, which includes the current portion
    of natural gas and interest rate swaps.                              



F-15



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                               |  |              |            |   |              |   |             |  
|------------------------------------------------------------------------------ |  | ------------ | ---------- | - | ------------ | - | ----------- | -
|                                                                               |  | December 31, |            |   | December 31, |  
|                                                                               |  | 2004         |            |   | 2005         |  
|                                                                               |  |              |            |   |              |  
|Outstanding balance                                                            |  | $            | 72,605,000 |   |              | $ | 207,000,000 |  
|Less deferred financing fees, net of amortization of $143,857
    and $160,124 |  |              | (394,893   | ) |              |   | (881,210    | )
|                                                                               |  |              |            |   |              |  
|                                                                               |  | $            | 72,210,107 |   |              | $ | 206,118,790 |  
|                                                                               |  |              |            |   |              |  







| |                       
| | ----------------------
| | Subordinated Term Loan





|                                                              |  |              |            |  
|------------------------------------------------------------- |  | ------------ | ---------- | -
|                                                              |  | December 31, |           
|                                                              |  | 2005         |           
|                                                              |  |              |           
|Outstanding balance                                           |  | $            | 60,000,000 |  
|Less deferred financing fees, net of amortization of $249,312 |  |              | (498,625   | )
|                                                              |  |              |           
|                                                              |  | $            | 59,501,375 |  
|                                                              |  |              |           





| |                    
| | -------------------
| | Interest Rate Swaps





F-16



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |   |                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Agreement effective in April 2005 for $30 million. The
    Company made quarterly interest payments during 2005 at a rate
    of 3.24%. The agreement matures in January 2006.                  
|
| |  | Agreement effective in January 2006 for $30 million. The
    Company is required to make quarterly interest payments during
    2006 at a rate of 4.4%. The agreement matures in January 2007.  
|
| |  | Agreement effective in January 2007 for $50 million. The
    Company is required to make quarterly interest payments during
    2007 at a rate of 5.3%. The agreement matures in December 2007. 
|
| |  | Agreement effective in January 2008 for $50 million. The
    Company is required to make quarterly interest payments during
    2008 at a rate of 5.79%. The agreement matures in December 2008.







|    |             
|--- | ------------
|(4) | Income Taxes





F-17



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


C-corporation


|             |  |         |   |          |  |   |        |  |  |   |        | 
|------------ |  | ------- | - | -------- |  | - | ------ |  |  | - | ------ | 
|             |  | Current |   | Deferred |  |   | Total  | 
|             |  |         |   |          |  |   |        | 
|2005:        |  |         |   |          |  |   |        |  |  |   |        | 
|U.S. federal |  | $       |  |          |  | $ | 56,712 |  |  | $ | 56,712 | 
|State        |  |         |  |          |  |   | 17,752 |  |  |   | 17,752 | 
|             |  |         |   |          |  |   |        |  | 
|             |  | $       |  |          |  | $ | 74,464 |  |  | $ | 74,464 | 
|             |  |         |   |          |  |   |        |  | 





|                          |                                                                             |                                |   |         |         | 
|------------------------- | --------------------------------------------------------------------------- | ------------------------------ | - | ------- | ------- | 
|Deferred tax assets:      |                                                                             |                                |   |        
|                          | Net operating loss carryforwards                                            |                                | $ | 2,579   |        
|                          | Charitable contribution carryforwards                                       |                                |   | 24,034  |        
|                          | Allowance for doubtful accounts                                             |                                |   | 40,270  |        
|                          |                                                                             |                                |  
|                          |                                                                             | Total deferred tax assets      |   |         | 66,883  | 
|                          |                                                                             |                                |  
|Deferred tax liabilities: |                                                                             |                                |   |        
|                          | Properties and equipment principally due to differences in
    depreciation |                                |   | 141,347 |        
|                          |                                                                             |                                |  
|                          |                                                                             | Total deferred tax liabilities |   |         | 141,347 | 
|                          |                                                                             |                                |  
|                          |                                                                             | Net deferred tax liabilities   |   | $       | 74,464  | 
|                          |                                                                             |                                |  



|                                  |  |   |             |   |  |  |        |   
|--------------------------------- |  | - | ----------- | - |  |  | ------ | --
|Federal, U.S. statutory rate      |  | $ | (19,134,748 | ) |  |  | (34.00 | )%
|State, net of federal tax benefit |  |   | 11,716      |   |  |  | 0.02   | % 
|Loss from non-taxable entities    |  |   | 19,168,182  |   |  |  | 34.06  | % 
|Other items                       |  |   | 29,314      |   |  |  | 0.05   | % 
|                                  |  |   |             |   |  | 
|Provision for income taxes        |  | $ | 74,464      |   |  |  | 0.13   | % 
|                                  |  |   |             |   |  | 





|    |                           
|--- | --------------------------
|(5) | Related Party Transactions



F-18



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|    |                              
|--- | -----------------------------
|(6) | Commitments and Contingencies







|                 |  |           |         |  |          |   |       |         |  |  |                    |  |  |                  |         |  |         |  |         |  |  |  |         | 
|---------------- |  | --------- | ------- |  | -------- | - | ----- | ------- |  |  | ------------------ |  |  | ---------------- | ------- |  | ------- |  | ------- |  |  |  | ------- | 
|                 |  | Number of |         |  | Exercise |   |       | Vesting |  |  | Number of          |  |  | Number of        |         |  | Service | 
|                 |  | Options   |         |  | Price    |   |       | Period  |  |  | Unrestricted Units |  |  | Restricted Units |         |  | Period  | 
|                 |  |           |         |  |          |   |       |         |  |  |                    |  |  |                  |         |  |         | 
|President & CEO  |  |           | 111,250 |  |          | $ | 21.00 |         |  |  | 3 years            |  |  |                  |        |  |         |  | 625,781 |  |  |  | 1 year  | 
|CFO              |  |           | 111,250 |  |          |   | 21.00 |         |  |  | 3 years            |  |  |                  | 114,455 |  |         |  | 228,909 |  |  |  | 2 years | 
|SVP  Operations |  |           | 75,000  |  |          |   | 19.74 |         |  |  | 3 years            |  |  |                  |        |  |         |  | 20,000  |  |  |  | 3 years | 



|    |                                   
|--- | ----------------------------------
|(7) | Business and Credit Concentrations



| |     
| | ----
| | Cash





| |                              
| | -----------------------------
| | Revenue and Trade Receivables



F-19



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                        
|--- | -----------------------
|(8) | Natural Gas Derivatives





|                                                                                                  |  |             |            |   |      |   |             |  
|------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | - | ---- | - | ----------- | -
|                                                                                                  |  | December 31 |           
|                                                                                                  |  |             |           
|                                                                                                  |  | 2004        |            |   | 2005 |  
|                                                                                                  |  |             |            |   |      |  
|Net unrealized gain (loss) at balance sheet date expected to be
    settled within next 12 months |  | $           | (2,725,154 | ) |      | $ | (9,167,877  | )
|Net unrealized gain (loss) at balance sheet date expected to be
    settled beyond next 12 months |  |             | (7,639,555 | ) |      |   | (24,344,557 | )
|Outstanding notional amounts of hedges (MMMBtu)                                                   |  |             | 12,628     |   |      |   | 28,069      |  
|Maximum number of months hedges outstanding                                                       |  |             | 61         |   |      |   | 48          |  





out-of




|    |                 
|--- | ----------------
|(9) | Operating Leases

Accounting for Leases.


F-20



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|           |  |   |           | 
|---------- |  | - | --------- | 
|2006       |  | $ | 447,199   | 
|2007       |  |   | 428,671   | 
|2008       |  |   | 399,123   | 
|2009       |  |   | 342,654   | 
|2010       |  |   | 298,396   | 
|Thereafter |  |   | 1,495,869 | 
|           |  |   |          
|           |  | $ | 3,411,912 | 
|           |  |   |          



|     |                        
|---- | -----------------------
|(10) | Long-term Notes Payable



|                                                                                                                                                                                                                                                                                               |  |              |         |  |      |   |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- |  | ---- | - | ------- | 
|                                                                                                                                                                                                                                                                                               |  | December 31, |        
|                                                                                                                                                                                                                                                                                               |  |              |        
|                                                                                                                                                                                                                                                                                               |  | 2004         |         |  | 2005 |  
|                                                                                                                                                                                                                                                                                               |  |              |         |  |      |  
|Note payable to a bank with an interest rate of 6.14%, payable
    in monthly installments of $2,918, including interest, through
    September 2024. The note is secured by an office building                                                                                                |  | $            | 397,439 |  |      | $ | 386,853 | 
|Various notes for the purchase of vehicles, payable in monthly
    installments totaling $4,752 and $10,806 as of December 31,
    2004 and 2005, respectively, including interest. The notes are
    secured by the vehicles purchased and expire at various dates
    from 2008 through 2010 |  |              | 200,541 |  |      |   | 420,866 | 
|                                                                                                                                                                                                                                                                                               |  |              |         |  |      |  
|                                                                                                                                                                                                                                                                                               |  |              | 597,980 |  |      |   | 807,719 | 
|Less current portion                                                                                                                                                                                                                                                                           |  |              | 58,113  |  |      |   | 112,904 | 
|                                                                                                                                                                                                                                                                                               |  |              |         |  |      |  
|                                                                                                                                                                                                                                                                                               |  | $            | 539,867 |  |      | $ | 694,815 | 
|                                                                                                                                                                                                                                                                                               |  |              |         |  |      |  



|             |      |   |         |         | 
|------------ | ---- | - | ------- | ------- | 
|December 31: |      |   |         |        
|             | 2006 |   | $       | 112,904 | 
|             | 2007 |   |         | 121,084 | 
|             | 2008 |   |         | 125,135 | 
|             | 2009 |   |         | 80,618  | 
|             | 2010 |   |         | 46,908  | 
|Thereafter   |      |   | 321,070 |        
|             |      |   |        
|             |      | $ | 807,719 |        
|             |      |   |        



|     |                            
|---- | ---------------------------
|(11) | Asset Retirement Obligation


Accounting for Asset Retirement Obligations


F-21



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                                                        |  |              |           |  |              |   |           |              |  |   |           | 
|------------------------------------------------------------------------------------------------------- |  | ------------ | --------- |  | ------------ | - | --------- | ------------ |  | - | --------- | 
|                                                                                                        |  | December 31, |           |  | December 31, |   |           | December 31, | 
|                                                                                                        |  | 2003         |           |  | 2004         |   |           | 2005         | 
|                                                                                                        |  |              |           |  |              |   |           |              | 
|Carrying amount of asset retirement obligation at beginning of
    year/period                          |  | $            |          |  |              | $ | 2,053,077 |              |  | $ | 3,856,584 | 
|Liabilities added during the current period related to
    acquisitions or drilling of additional wells |  |              | 2,036,095 |  |              |   | 1,711,252 |              |  |   | 1,389,163 | 
|Cash withheld during the current period from unrelated third
    parties who own working interests      |  |              | 2,299     |  |              |   | 18,754    |              |  |   | 24,439    | 
|Current period accretion expense                                                                        |  |              | 14,683    |  |              |   | 73,501    |              |  |   | 172,426   | 
|                                                                                                        |  |              |           |  |              |   |           |              | 
|Carrying amount of asset retirement obligations at end of
    year/period                               |  | $            | 2,053,077 |  |              | $ | 3,856,584 |              |  | $ | 5,442,612 | 
|                                                                                                        |  |              |           |  |              |   |           |              | 





|     |                                                                                                      
|---- | -----------------------------------------------------------------------------------------------------
|(12) | Costs Incurred in Natural Gas and Oil Property Acquisition
    and Development Activities (Unaudited)



|                                                                                                     |          |                |            |            |                         |  |            |            |  |  |             |           | 
|---------------------------------------------------------------------------------------------------- | -------- | -------------- | ---------- | ---------- | ----------------------- |  | ---------- | ---------- |  |  | ----------- | --------- | 
|                                                                                                     |          | March 14,      |            |            |                         |  |           
|                                                                                                     |          | 2003           |            |            |                         |  |           
|                                                                                                     |          | (inception) to |            |            |                        
|                                                                                                     |          | December 31,   |            |            | Year Ended December 31, | 
|                                                                                                     |          |                |            |            |                         | 
|                                                                                                     |          | 2003           |            |            | 2004                    |  |            |           
|                                                                                                     |          | (Restated)     |            |            | (Restated)              |  |            | 2005       | 
|                                                                                                     |          |                |            |            |                         |  |            |            | 
|Property acquisition costs:                                                                          |          |                |            |            |                         |  |            |            |  |  |             |          
|                                                                                                     | Proved   |                | $          | 11,746,120 |                         |  | $          | 10,463,530 |  |  | $           | 6,442,407 | 
|                                                                                                     | Unproved |                |            | 1,042,500  |                         |  |            | 2,940,024  |  |  |             | 579,376   | 
|Development costs                                                                                    |          |                | 40,054,645 |            |                         |  | 31,525,879 |            |  |  | 139,191,063 |          
|Pipelines                                                                                            |          |                |           |            |                         |  | 1,536,878  |            |  |  | 4,043,042   |          
|Companys share of equity investees costs of property
    acquisition, exploration, and development |          |                |           |            |                         |  | 15,498     |            |  |  |            |          





F-22



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|     |                                                  
|---- | -------------------------------------------------
|(13) | Natural Gas and Oil Capitalized Costs (Unaudited)



|                                                                      |                       |                    |            |            |      |   |             |             | 
|--------------------------------------------------------------------- | --------------------- | ------------------ | ---------- | ---------- | ---- | - | ----------- | ----------- | 
|                                                                      |                       | As of December 31, |           
|                                                                      |                       |                    |           
|                                                                      |                       | 2004               |            |            |     
|                                                                      |                       | (Restated)         |            |            | 2005 |  
|                                                                      |                       |                    |            |            |      |  
|Proved natural gas and oil properties                                 |                       | $                  | 93,790,174 |            |      | $ | 239,423,644 |            
|Unproved natural gas and oil properties                               |                       |                    | 3,982,524  |            |      |   | 4,561,900   |            
|Pipelines                                                             |                       |                    | 1,536,878  |            |      |   | 5,579,920   |            
|                                                                      |                       |                    |            |            |      |  
|                                                                      |                       |                    | 99,309,576 |            |      |   | 249,565,464 |            
|Less accumulated depreciation, depletion, and amortization            |                       |                    | 3,928,802  |            |      |   | 10,707,358  |            
|                                                                      |                       |                    |            |            |      |  
|                                                                      | Net capitalized costs |                    | $          | 95,380,774 |      |   | $           | 238,858,106 | 
|                                                                      |                       |                    |            |            |      |  
|Companys share of equity method investees net
    capitalized costs |                       | $                  | 69,685     |            |      | $ |            |            
|                                                                      |                       |                    |            |            |      |  

F-23



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                                                    
|---- | -------------------------------------------------------------------
|(14) | Results of Natural Gas and Oil Producing Activities
    (Unaudited)



|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |           |   |   |             |             |  
|--------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------ | - | ---------- | ----------------------- | - | - | ---------- | --------- | - | - | ----------- | ----------- | -
|          |                                                                                                                                            | Period from                                                                                                              |   |            |                         |   |  
|          |                                                                                                                                            | March 14,                                                                                                                |   |            |                         |   |  
|          |                                                                                                                                            | 2003                                                                                                                     |   |            |                         |   |  
|          |                                                                                                                                            | (inception) to                                                                                                           |   |            |                        
|          |                                                                                                                                            | December 31,                                                                                                             |   |            | Year Ended December 31, |  
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |  
|          |                                                                                                                                            | 2003                                                                                                                     |   |            | 2004                    |   |   |           
|          |                                                                                                                                            | (Restated)                                                                                                               |   |            | (Restated)              |   |   | 2005       |          
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          
|Revenue:  |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |           |   |   |            
|          | Natural gas and oil sales, excluding Penn West marketing sales
    of $0, $520,340 and $4,722,587 in 2003, 2004 and 2005,
    respectively |                                                                                                                          | $ | 2,379,301  |                         |   | $ | 19,502,114 |           |   | $ | 44,644,593  |            
|          | Realized gains (losses) on natural gas derivatives                                                                                         |                                                                                                                          |   | 162,890    |                         |   |   | (2,239,506 | )         |   |   | (51,417,870 | )          
|          | Unrealized (losses) on natural gas derivatives                                                                                             |                                                                                                                          |   | (1,599,854 | )                       |   |   | (8,764,855 | )         |   |   | (24,775,625 | )          
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          
|          |                                                                                                                                            | Net natural gas and oil sales                                                                                            |   |            | 942,337                 |   |   |            | 8,497,753 |   |   |             | (31,548,902 | )
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          
|Expenses: |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |           |   |   |            
|          | Production costs                                                                                                                           |                                                                                                                          |   | 798,236    |                         |   |   | 4,756,071  |           |   |   | 7,356,134   |            
|          | Depreciation, depletion, and amortization                                                                                                  |                                                                                                                          |   | 536,450    |                         |   |   | 3,520,604  |           |   |   | 6,948,258   |            
|          | Income tax provision                                                                                                                       |                                                                                                                          |   |           |                         |   |   |           |           |   |   | 74,464      |            
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          
|          |                                                                                                                                            | Total expenses                                                                                                           |   |            | 1,334,686               |   |   |            | 8,276,675 |   |   |             | 14,378,856  |  
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          
|          |                                                                                                                                            | Results of operations for natural gas and oil producing
    activities (excluding corporate overhead and interest costs) |   | $          | (392,349                | ) |   | $          | 221,078   |   |   | $           | (45,927,758 | )
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          
|          |                                                                                                                                            | Companys share of equity method investees results of
    operations for producing activities                           |   | $          | (2,929                  | ) |   | $          | (56,126   | ) |   | $           | (16,714     | )
|          |                                                                                                                                            |                                                                                                                          |   |            |                         |   |   |            |          







|     |                                            
|---- | -------------------------------------------
|(15) | Net Proved Natural Gas Reserves (Unaudited)



F-24



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |                                 |            |  |            |            |  |  |             |   |  |  |             |  
|------------------------------------------ | ------------------------------- | ---------- |  | ---------- | ---------- |  |  | ----------- | - |  |  | ----------- | -
|                                           |                                 | 2003       |  |            | 2004       |  |  |            
|                                           |                                 | (Restated) |  |            | (Restated) |  |  | 2005        |  
|                                           |                                 |            |  |            |            |  |  |             |  
|                                           |                                 | (Mcfe)     | 
|Proved developed and undeveloped reserves: |                                 |            |  |            |            |  |  |             |   |  |  |            
|                                           | Beginning of year               |            |  |           |            |  |  | 69,805,000  |   |  |  | 119,760,000 |  
|                                           | Revisions of previous estimates |            |  |           |            |  |  | 754,946     |   |  |  | 2,415,121   |  
|                                           | Purchase of minerals in place   |            |  | 70,296,743 |            |  |  | 35,827,119  |   |  |  | 53,976,408  |  
|                                           | Extensions and discoveries      |            |  |           |            |  |  | 16,484,959  |   |  |  | 21,897,842  |  
|                                           | Production                      |            |  | (491,743   | )          |  |  | (3,112,024  | ) |  |  | (4,838,586  | )
|                                           |                                 |            |  |            |            |  |  |             |  
|                                           | End of year                     |            |  | 69,805,000 |            |  |  | 119,760,000 |   |  |  | 193,210,785 |  
|                                           |                                 |            |  |            |            |  |  |             |  
|Proved developed reserves:                 |                                 |            |  |            |            |  |  |             |   |  |  |            
|                                           | Beginning of year               |            |  |           |            |  |  | 41,760,059  |   |  |  | 74,365,863  |  
|                                           |                                 |            |  |            |            |  |  |             |  
|                                           | End of year                     |            |  | 41,760,059 |            |  |  | 74,365,863  |   |  |  | 125,219,750 |  
|                                           |                                 |            |  |            |            |  |  |             |  











|     |                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------
|(16) | Standardized Measure of Discounted Future Net Cash Flows and
    Changes Therein Relating to Proved Reserves (Unaudited)



F-25



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                       |                       |                                                                        |              |             |             |   |              |             |             |   |                |               |             | 
|------------------------------------------------------ | --------------------- | ---------------------------------------------------------------------- | ------------ | ----------- | ----------- | - | ------------ | ----------- | ----------- | - | -------------- | ------------- | ----------- | 
|                                                       |                       | December 31                                                            |             
|                                                       |                       |                                                                        |             
|                                                       |                       | 2003                                                                   |              |             | 2004        |   |              | 2005        |            
|                                                       |                       |                                                                        |              |             |             |   |              |             |            
|Future estimated revenues                              |                       | $                                                                      | 462,420,073  |             |             | $ | 840,126,938  |             |             | $ | 2,041,930,250  |              
|Future estimated production costs                      |                       |                                                                        | (79,798,024  | )           |             |   | (146,672,338 | )           |             |   | (332,839,601   | )            
|Future estimated development costs                     |                       |                                                                        | (24,076,000  | )           |             |   | (41,417,000  | )           |             |   | (96,541,602    | )            
|                                                       |                       |                                                                        |              |             |             |   |              |             |            
|                                                       | Future net cash flows |                                                                        |              | 358,546,049 |             |   |              | 652,037,600 |             |   |                | 1,612,549,047 |            
|10% annual discount for estimated timing of cash flows |                       |                                                                        | (232,204,590 | )           |             |   | (437,003,850 | )           |             |   | (1,060,473,609 | )            
|                                                       |                       |                                                                        |              |             |             |   |              |             |            
|                                                       |                       | Standardized measure of discounted future estimated net cash
    flows |              | $           | 126,341,459 |   |              | $           | 215,033,750 |   |                | $             | 552,075,438 | 
|                                                       |                       |                                                                        |              |             |             |   |              |             |            



|                                                                  |  |                |             |   |                         |   |             |      |  |   |              |  
|----------------------------------------------------------------- |  | -------------- | ----------- | - | ----------------------- | - | ----------- | ---- |  | - | ------------ | -
|                                                                  |  | Period from    |             |   |                         |   |            
|                                                                  |  | March 14, 2003 |             |   |                         |   |            
|                                                                  |  | (inception) to |             |   |                        
|                                                                  |  | December 31,   |             |   | Year Ended December 31, |  
|                                                                  |  |                |             |   |                         |  
|                                                                  |  | 2003           |             |   | 2004                    |   |             |     
|                                                                  |  | (Restated)     |             |   | (Restated)              |   |             | 2005 | 
|                                                                  |  |                |             |   |                         |   |             |      | 
|Sales of natural gas and oil production, net of production costs  |  | $              | (1,581,065  | ) |                         | $ | (14,829,295 | )    |  | $ | (37,676,438  | )
|Changes in estimated future development costs                     |  |                | 24,076,000  |   |                         |   | 17,341,000  |      |  |   | 55,124,602   |  
|Net changes in prices and production costs                        |  |                |            |   |                         |   | 4,442,714   |      |  |   | 135,700,910  |  
|Acquisitions                                                      |  |                | 103,560,106 |   |                         |   | 57,970,302  |      |  |   | 64,361,364   |  
|Extensions, discoveries, and improved recovery, less related cost |  |                |            |   |                         |   | 26,507,130  |      |  |   | 192,411,553  |  
|Development costs incurred during the period                      |  |                | 286,418     |   |                         |   | 16,732,586  |      |  |   | 26,405,922   |  
|Revisions of previous quantity estimates                          |  |                |            |   |                         |   | 3,671,382   |      |  |   | 1,026,356    |  
|Less change in discount                                           |  |                |            |   |                         |   | (23,143,528 | )    |  |   | (100,312,581 | )
|                                                                  |  |                |             |   |                         |   |             |      | 
|                                                                  |  | $              | 126,341,459 |   |                         | $ | 88,692,291  |      |  | $ | 337,041,688  |  
|                                                                  |  |                |             |   |                         |   |             |      | 





|     |                  
|---- | -----------------
|(17) | Subsequent Events



F-26



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Share-Based Payment




|     |                                                             
|---- | ------------------------------------------------------------
|(18) | December 31, 2005 Pro Forma Members Capital
    (Unaudited)



F-27



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                                     
|---- | ------------------------------------
|(19) | Quarterly Financial Data (Unaudited)

|                                           |  |                     |             |   |         |   |            |              |  |   |             |   |  |   |            |  
|------------------------------------------ |  | ------------------- | ----------- | - | ------- | - | ---------- | ------------ |  | - | ----------- | - |  | - | ---------- | -
|                                           |  | 2005 Quarters Ended |            
|                                           |  |                     |            
|                                           |  | March 31            |             |   | June 30 |   |            | September 30 |  |   | December 31 |  
|                                           |  |                     |             |   |         |   |            |              |  |   |             |  
|Natural gas and oil sales                  |  | $                   | 6,146,326   |   |         | $ | 7,854,890  |              |  | $ | 10,407,054  |   |  | $ | 20,236,323 |  
|Realized (loss) on natural gas derivatives |  |                     | (8,575,226  | ) |         |   | (8,188,392 | )            |  |   | (29,058,028 | ) |  |   | (5,596,224 | )
|Total revenue                              |  |                     | (8,121,404  | ) |         |   | 1,582,429  |              |  |   | (38,417,632 | ) |  |   | 18,475,741 |  
|Operating expenses                         |  |                     | 1,817,402   |   |         |   | 1,488,156  |              |  |   | 1,385,433   |   |  |   | 2,665,143  |  
|General and administrative expenses        |  |                     | 477,803     |   |         |   | 670,170    |              |  |   | 1,197,167   |   |  |   | 986,784    |  
|Net income (loss)                          |  | $                   | (12,399,159 | ) |         | $ | (5,276,697 | )            |  | $ | (45,588,923 | ) |  | $ | 6,913,943  |  
|Net (loss) per unit                        |  |                     | n/m         |   |         |   | n/m        |              |  |   | n/m         |   |  |   | n/m        |  

|                                           |  |                     |            |   |         |   |           |              |  |   |             |   |  |   |            |  
|------------------------------------------ |  | ------------------- | ---------- | - | ------- | - | --------- | ------------ |  | - | ----------- | - |  | - | ---------- | -
|                                           |  | 2004 Quarters Ended |           
|                                           |  |                     |           
|                                           |  | March 31            |            |   | June 30 |   |           | September 30 |  |   | December 31 |  
|                                           |  |                     |            |   |         |   |           |              |  |   |             |  
|Natural gas and oil sales                  |  | $                   | 3,474,919  |   |         | $ | 4,359,613 |              |  | $ | 4,732,495   |   |  | $ | 6,935,087  |  
|Realized (loss) on natural gas derivatives |  |                     | (170,175   | ) |         |   | (503,625  | )            |  |   | (251,775    | ) |  |   | (1,313,931 | )
|Total revenue                              |  |                     | 642,028    |   |         |   | 2,045,621 |              |  |   | (1,850,450  | ) |  |   | 8,341,025  |  
|Operating expenses                         |  |                     | 849,253    |   |         |   | 1,351,426 |              |  |   | 1,382,450   |   |  |   | 1,172,942  |  
|General and administrative expenses        |  |                     | 256,622    |   |         |   | 415,905   |              |  |   | 403,135     |   |  |   | 412,302    |  
|Net income (loss)                          |  | $                   | (2,033,622 | ) |         | $ | (715,257  | )            |  | $ | (6,534,538  | ) |  | $ | 4,467,611  |  
|Net income (loss) per unit                 |  |                     | n/m        |   |         |   | n/m       |              |  |   | n/m         |   |  |   | n/m        |  






|      |                                                                                                                                                                                                                                                                                                                                                                                                                   
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|n/m  | As the Company completed its initial public offering during the
    first quarter of 2006, there were no outstanding units prior to
    and as of December 31, 2005. The preoffering members held
    membership interests in the Company and, therefore, no units
    were issued prior to the completion of the initial public
    offering rendering net income (loss) per unit information not
    meaningful.

(20)     Restatement




Business Combinations


Financial Accounting and Reporting by
Oil and Gas Producing Companies


F-28



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                           
| | --------------------------
| | Effects of the Restatement







| |                                           
| | ------------------------------------------
| | Summary of Effects on Statements of Income

|                                  |                                          |                |         |           |              |             |                   |               |   |   |         |           |   |   |         |          |  
|--------------------------------- | ---------------------------------------- | -------------- | ------- | --------- | ------------ | ----------- | ----------------- | ------------- | - | - | ------- | --------- | - | - | ------- | -------- | -
|                                  |                                          | Period from    |         |           |              |             |                  
|                                  |                                          | March 14, 2003 |         |           |              |             | Nine months ended |              
|                                  |                                          | (inception) to |         |           | Year ended   |             |                   | September 30, |  
|                                  |                                          | December 31,   |         |           | December 31, |             |                   |               |  
|                                  |                                          | 2003           |         |           | 2004         |             |                   | 2004          |   |   | 2005    |          
|                                  |                                          |                |         |           |              |             |                   |               |   |   |         |          
|                                  |                                          |                |         |           |              | (unaudited) |                  
|Adjustments to net loss:          |                                          |                |         |           |              |             |                   |               |   |   |         |           |   |   |         |         
|                                  | Acquisition date for purchase accounting |                | $       | 1,066,229 |              |             | $                 | 1,855,735     |   |   | $       | 1,457,712 |   |   | $       | 187,546  |  
|                                  | Lease acquisition costs                  |                |         | (46,120   | )            |             |                   | (367,526      | ) |   |         | (290,928  | ) |   |         | (102,602 | )
|                                  | Development drilling dry hole costs      |                |         |          |              |             |                   | (128,253      | ) |   |         | (128,253  | ) |   |         |         |  
|                                  | Depreciation, depletion and amortization |                |         | (409,673  | )            |             |                   | (92,987       | ) |   |         | 71,465    |   |   |         | 299,055  |  
|                                  | Operating receivables                    |                |         | (257,131  | )            |             |                   | (428,951      | ) |   |         | (183,877  | ) |   |         | 24,783   |  
|                                  |                                          |                |         |           |              |             |                   |               |   |   |         |          
|Net increase in reported net loss |                                          | $              | 353,305 |           |              | $           | 838,018           |               |   | $ | 926,119 |           |   | $ | 408,782 |         
|                                  |                                          |                |         |           |              |             |                   |               |   |   |         |          

The effect of the restatement on the consolidated
financial statements by line item follows:


|                                                          |  |                   |             |   |          |   |             |  
|--------------------------------------------------------- |  | ----------------- | ----------- | - | -------- | - | ----------- | -
|                                                          |  | December 31, 2004 |            
|                                                          |  |                   |            
|                                                          |  | As Previously     |             |   |         
|                                                          |  | Reported          |             |   | Restated |  
|Consolidated Balance Sheets Data:                         |  |                   |             |   |          |  
|Receivables  natural gas and oil                         |  | $                 | 4,807,196   |   |          | $ | 5,462,775   |  
|Total current assets                                      |  |                   | 7,281,746   |   |          |   | 8,080,285   |  
|Natural gas and oil properties and related equipment      |  |                   | 101,682,305 |   |          |   | 99,309,576  |  
|Less accumulated depreciation, depletion and amortization |  |                   | 4,559,714   |   |          |   | 3,928,802   |  
|Net natural gas and oil properties                        |  |                   | 97,122,591  |   |          |   | 95,380,774  |  
|Total Assets                                              |  |                   | 106,333,571 |   |          |   | 105,424,855 |  
|Accounts payable and accrued expenses                     |  |                   | 3,027,201   |   |          |   | 3,132,286   |  
|Total current liabilities                                 |  |                   | 9,967,574   |   |          |   | 10,215,619  |  
|Total liabilities                                         |  |                   | 95,622,316  |   |          |   | 95,904,923  |  
|Accumulated loss                                          |  |                   | (5,312,488  | ) |          |   | (6,503,811  | )
|Total members capital (deficit)                          |  |                   | 10,711,255  |   |          |   | 9,519,932   |  
|Total liabilities and members capital (deficit)          |  |                   | 106,333,571 |   |          |   | 105,424,855 |  

F-29



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                              |  |                                  |             |   |                   |   |               |          |  |   |             |   |  |   |             |  
|------------------------------------------------------------- |  | -------------------------------- | ----------- | - | ----------------- | - | ------------- | -------- |  | - | ----------- | - |  | - | ----------- | -
|                                                              |  | Period from March 14, 2003       |             |   | Year ended        |  
|                                                              |  | (inception) to December 31, 2003 |             |   | December 31, 2004 |  
|                                                              |  |                                  |             |   |                   |  
|                                                              |  | As Previously                    |             |   |                   |   | As Previously |          |  |  
|                                                              |  | Reported                         |             |   | Restated          |   |               | Reported |  |   | Restated    |  
|                                                              |  |                                  |             |   |                   |   |               |          |  |   |             |  
|Consolidated Statements of Operations Data                    |  |                                  |             |   |                   |   |               |          |  |   |             |   |  |   |             |  
|Natural gas and oil sales                                     |  | $                                | 3,323,465   |   |                   | $ | 2,379,301     |          |  | $ | 21,231,640  |   |  | $ | 19,502,114  |  
|Total revenue                                                 |  |                                  | 1,890,279   |   |                   |   | 946,115       |          |  |   | 10,907,750  |   |  |   | 9,178,224   |  
|Operating expenses                                            |  |                                  | 916,638     |   |                   |   | 798,236       |          |  |   | 5,459,503   |   |  |   | 4,756,071   |  
|General and administrative expenses                           |  |                                  | 845,633     |   |                   |   | 782,849       |          |  |   | 1,583,054   |   |  |   | 1,487,964   |  
|Depreciation, depletion and amortization                      |  |                                  | 972,119     |   |                   |   | 562,446       |          |  |   | 3,749,318   |   |  |   | 3,656,332   |  
|Total expenses                                                |  |                                  | 2,734,390   |   |                   |   | 2,143,531     |          |  |   | 11,273,868  |   |  |   | 10,382,360  |  
|Loss from operations                                          |  |                                  | (844,111    | ) |                   |   | (1,197,416    | )        |  |   | (366,118    | ) |  |   | (1,204,136  | )
|Loss before income taxes                                      |  |                                  | (1,334,700  | ) |                   |   | (1,688,005    | )        |  |   | (3,977,788  | ) |  |   | (4,815,806  | )
|Net (loss)                                                    |  |                                  | (1,334,700  | ) |                   |   | (1,688,005    | )        |  |   | (3,977,788  | ) |  |   | (4,815,806  | )
|Pro forma (loss) per unit (unaudited)                         |  |                                  | (0.5        | ) |                   |   | (0.6          | )        |  |   | (0.14       | ) |  |   | (0.17       | )
|                                                             
|Consolidated Statements of Members Capital (Deficit)         |  |                                  |             |   |                   |   |               |          |  |   |             |   |  |   |             |  
|Net (loss)                                                    |  |                                  | (1,334,700  | ) |                   |   | (1,688,005    | )        |  |   | (3,977,788  | ) |  |   | (4,815,806  | )
|Accumulated loss                                              |  |                                  | (1,334,700  | ) |                   |   | (1,688,005    | )        |  |   | (5,312,488  | ) |  |   | (6,503,811  | )
|Total members capital (deficit)                              |  |                                  | 14,689,043  |   |                   |   | 14,335,738    |          |  |   | 10,711,255  |   |  |   | 9,519,932   |  
|                                                             
|Consolidated Statements of Cash Flows                         |  |                                  |             |   |                   |   |               |          |  |   |             |   |  |   |             |  
|Net (loss)                                                    |  |                                  | (1,334,700  | ) |                   |   | (1,688,005    | )        |  |   | (3,977,788  | ) |  |   | (4,815,806  | )
|Depreciation, depletion and amortization                      |  |                                  | 972,119     |   |                   |   | 562,446       |          |  |   | 3,749,318   |   |  |   | 3,656,332   |  
|Increase (decrease) in accounts receivable                    |  |                                  | (1,523,471  | ) |                   |   | (1,780,602    | )        |  |   | (3,366,264  | ) |  |   | (3,724,712  | )
|Increase in accounts payable and accrued expenses             |  |                                  | 376,471     |   |                   |   | 257,698       |          |  |   | 1,338,981   |   |  |   | 1,562,839   |  
|Net cash provided by (used in) operating activities           |  |                                  | 928,856     |   |                   |   | (134,684      | )        |  |   | 11,381,222  |   |  |   | 10,350,985  |  
|Acquisition and development of natural gas and oil properties |  |                                  | (33,592,681 | ) |                   |   | (32,453,799   | )        |  |   | (63,140,333 | ) |  |   | (62,074,739 | )
|Net cash provided by (used in) investing activities           |  |                                  | (36,407,595 | ) |                   |   | (35,344,055   | )        |  |   | (62,402,212 | ) |  |   | (61,371,975 | )

F-30



---



##### 



LINN ENERGY, LLC AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                                                        |  |                    |             |   |          |   |             |  
|----------------------------------------------------------------------- |  | ------------------ | ----------- | - | -------- | - | ----------- | -
|                                                                        |  | Nine Months ended  |            
|                                                                        |  | September 30, 2004 |            
|                                                                        |  |                    |            
|                                                                        |  | As Previously      |             |   |         
|                                                                        |  | Reported           |             |   | Restated |  
|                                                                        |  |                    |             |   |          |  
|                                                                        |  | (unaudited)        |            
|Consolidated Statement of Operations                                    |  |                    |             |   |          |   |             |  
|Natural gas and oil sales                                               |  | $                  | 14,205,439  |   |          | $ | 12,567,027  |  
|Total revenue                                                           |  |                    | 2,475,610   |   |          |   | 837,199     |  
|Operating expenses                                                      |  |                    | 4,376,894   |   |          |   | 3,583,129   |  
|General and administrative expenses                                     |  |                    | 1,065,655   |   |          |   | 1,075,662   |  
|Depreciation, depletion and amortization                                |  |                    | 2,408,498   |   |          |   | 2,479,963   |  
|Total expenses                                                          |  |                    | 7,851,047   |   |          |   | 7,138,754   |  
|Net operating income                                                    |  |                    | (5,375,437  | ) |          |   | (6,301,555  | )
|Loss before income taxes                                                |  |                    | (8,357,298  | ) |          |   | (9,283,417  | )
|Net (loss)                                                              |  |                    | (8,357,298  | ) |          |   | (9,283,417  | )
|Consolidated Statement of Cash Flows                                    |  |                    |             |   |          |   |             |  
|Net (loss)                                                              |  |                    | (8,357,298  | ) |          |   | (9,283,417  | )
|Depreciation, depletion and amortization                                |  |                    | 2,408,498   |   |          |   | 2,479,963   |  
|(Increase) in accounts receivable                                       |  |                    | (1,678,780  | ) |          |   | (2,165,963  | )
|Increase in accounts payable and accrued expenses                       |  |                    | 1,081,971   |   |          |   | 1,242,151   |  
|Net cash provided by operating activities                               |  |                    | 7,018,049   |   |          |   | 5,897,697   |  
|Acquisition of natural gas and oil properties and related
    equipment |  |                    | (58,095,318 | ) |          |   | (56,913,661 | )
|Net cash (used in) investing activities                                 |  |                    | (56,945,238 | ) |          |   | (55,784,636 | )

|                                                             |  |                    |             |   |          |  |             |  
|------------------------------------------------------------ |  | ------------------ | ----------- | - | -------- |  | ----------- | -
|                                                             |  | Nine Months ended  |            
|                                                             |  | September 30, 2005 |            
|                                                             |  |                    |            
|                                                             |  | As Previously      |             |   |         
|                                                             |  | Reported           |             |   | Restated | 
|                                                             |  |                    |             |   |          | 
|                                                             |  | (unaudited)        |            
|Consolidated Statement of Operations                         |  |                    |             |   |          |  |             |  
|Operating expenses                                           |  |                    | 4,617,088   |   |          |  | 4,690,991   |  
|General and administrative expenses                          |  |                    | 2,309,315   |   |          |  | 2,345,140   |  
|Depreciation, depletion and amortization                     |  |                    | 3,736,002   |   |          |  | 4,035,057   |  
|Total expenses                                               |  |                    | 13,824,335  |   |          |  | 14,233,117  |  
|Net operating income                                         |  |                    | (58,780,942 | ) |          |  | (59,189,724 | )
|Loss before income taxes                                     |  |                    | (62,471,205 | ) |          |  | (62,879,987 | )
|Net (loss)                                                   |  |                    | (62,855,997 | ) |          |  | (63,264,779 | )
|Consolidated Statement of Cash Flows                         |  |                    |             |   |          |  |             |  
|Net (loss)                                                   |  |                    | (62,855,997 | ) |          |  | (63,264,779 | )
|Depreciation, depletion and amortization                     |  |                    | 3,736,002   |   |          |  | 4,035,057   |  
|(Increase) in accounts receivable                            |  |                    | (3,134,727  | ) |          |  | (3,109,943  | )
|(Increase) in prepaid expenses and other assets              |  |                    | (2,216,093  | ) |          |  | (70,757     | )
|(Increase) in operating bonds                                |  |                    | (50,121     | ) |          |  |            |  
|(Decrease) increase in accounts payable and accrued expenses |  |                    | (33,471     | ) |          |  | 126,693     |  
|Net cash (used in) provided by operating activities          |  |                    | (36,660,808 | ) |          |  | (34,390,130 | )
|Acquisitions of natural gas properties and related equipment |  |                    | (27,098,019 | ) |          |  | (27,173,240 | )
|(Increase) in operating bonds                                |  |                    |            |   |          |  | (50,121     | )
|Net cash (used in) investing activities                      |  |                    | (28,309,258 | ) |          |  | (28,434,600 | )
|Deferred offering costs                                      |  |                    |            |   |          |  | (2,145,336  | )
|Net cash provided by financing activities                    |  |                    | 65,759,212  |   |          |  | 63,613,876  |  

F-31



---



##### 



EXHIBIT INDEX


|               |    |     |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                               
|-------------- | -- | --- |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |    |     |  | Description
|               |    |     |  |            
|               | 3  | .1  |  |            |  | Certificate of Formation of Linn Energy Holdings, LLC (now Linn
    Energy, LLC) (incorporated herein by reference to
    Exhibit 3.1 to the Registration Statement on Form S-1
    (File No. 333-125501) filed by Linn Energy, LLC on
    June 30, 2005 (the Form S-1))                                                                                                                                    
|               | 3  | .2  |  |            |  | Certificate of Amendment to Certificate of Formation of Linn
    Energy Holdings, LLC (now Linn Energy, LLC) (incorporated herein
    by reference to Exhibit 3.2 to the Form S-1)                                                                                                                                                                                                                            
|               | 3  | .3  |  |            |  | Second Amended and Restated Limited Liability Company Agreement
    of Linn Energy, LLC (incorporated herein by reference to
    Exhibit 3.1 to the Current Report on Form 8-K filed by
    Linn Energy, LLC on January 19, 2006)                                                                                                                                                                             
|               | 4  | .1* |  |            |  | Form of specimen unit certificate for the units of Linn Energy,
    LLC                                                                                                                                                                                                                                                                                                                                       
|               | 10 | .1  |  |            |  | Credit Agreement dated as of April 11, 2005, among Linn
    Energy, LLC (f/k/a Linn Energy Holdings, LLC), the Lenders from
    time to time party thereto, BNP Paribas, as administrative
    agent, and Royal Bank of Canada, as syndication agent
    (incorporated herein by reference to Exhibit 10.1 to the
    Form S-1)                                                                               
|               | 10 | .2  |  |            |  | First Amendment and Consent to Credit Agreement dated as of
    May 3, 2005, among Linn Energy, LLC (f/k/a Linn Energy
    Holdings, LLC), the Guarantors signatory thereto, the Lenders
    signatory thereto and BNP Paribas, as administrative agent
    (incorporated herein by reference to Exhibit 10.2 to the
    Form S-1)                                                                            
|               | 10 | .3  |  |            |  | Second Amendment to Credit Agreement dated as of August 12,
    2005, among Linn Energy, LLC, the Guarantors signatory thereto,
    the Lenders signatory thereto and BNP Paribas, as administrative
    agent (incorporated herein by reference to Exhibit 10.3 to
    Amendment No. 1 to the Registration Statement on
    Form S-1 filed by Linn Energy, LLC on September 19,
    2005 (Amendment No. 1))
|               | 10 | .4  |  |            |  | Letter Agreement dated as of August 24, 2005, among Linn
    Energy, LLC, the Lenders signatory thereto and BNP Paribas, as
    administrative agent (incorporated herein by reference to
    Exhibit 10.4 to Amendment No. 1)                                                                                                                                                                                
|               | 10 | .5  |  |            |  | Third Amendment to Credit Agreement dated as of October 27,
    2005, among Linn Energy, LLC, the Guarantors signatory thereto,
    the Lenders signatory thereto and BNP Paribas, as administrative
    agent (incorporated herein by reference to Exhibit 10.5 to
    Amendment No. 2 to the Registration Statement on
    Form S-1 filed by Linn Energy, LLC on October 31, 2005
    (Amendment No. 2))  
|               | 10 | .6  |  |            |  | Fourth Amendment to Credit Agreement dated as of
    December 19, 2005, among Linn Energy, LLC, the Guarantors
    signatory thereto, the Lenders signatory thereto and BNP
    Paribas, as administrative agent (incorporated herein by
    reference to Exhibit 10.6 to Amendment No. 5 to the
    Registration Statement on Form S-1 filed by Linn Energy,
    LLC on January 3, 2006 (Amendment No. 5)) 
|               | 10 | .7  |  |            |  | Second Lien Senior Subordinated Term Loan Agreement dated as of
    October 27, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as administrative agent, Societe Generale, as
    syndication agent, and the Lenders signatory thereto
    (incorporated herein by reference to Exhibit 10.6 to
    Amendment No. 2)                                                                                  
|               | 10 | .8  |  |            |  | First Amendment to Credit Agreement and Consent dated as of
    November 22, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as administrative agent, and the Lenders signatory
    thereto (incorporated herein by reference to Exhibit 10.7
    to Amendment No. 3 to the Registration Statement on
    Form S-1 filed by Linn Energy, LLC on November 25,
    2005 (Amendment No. 3))            
|               | 10 | .9  |  |            |  | Second Amendment to Credit Agreement and Consent dated as of
    December 19, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as administrative agent, and the Lenders signatory
    thereto (incorporated herein by reference to Exhibit 10.9
    to Amendment No. 5)                                                                                                                                
|               | 10 | .10 |  |            |  | Intercreditor and Subordination Agreement dated as of
    October 27, 2005, among Linn Energy, LLC, Royal Bank of
    Canada, as subordinated administrative agent, and BNP Paribas,
    as administrative agent for the senior revolving lenders
    (incorporated herein by reference to Exhibit 10.7 to
    Amendment No. 2)                                                                               



---



##### 



|               |    |      |  |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-------------- | -- | ---- |  | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |    |      |  | Description
|               |    |      |  |            
|               | 10 | .11  |  |            |  | Form of Asset Purchase Agreement dated as of October 1,
    2005, between Exploration Partners, LLC and others, as Seller,
    and Linn Energy Holdings, LLC and others, as Purchaser
    (incorporated herein by reference to Exhibit 10.8 to
    Amendment No. 2)                                                                                                                                                                                            
|               | 10 | .12 |  |            |  | Form of Linn Energy, LLC Long-Term Incentive Plan (incorporated
    herein by reference to Exhibit 10.10 to Amendment
    No. 4 to the Registration Statement on Form S-1 filed
    by Linn Energy, LLC on December 14, 2005 (Amendment
    No. 4))                                                                                                                                                                                                          
|               | 10 | .13 |  |            |  | Form of Unit Option Agreement Pursuant to the Linn Energy, LLC
    Long-Term Incentive Plan (incorporated herein by reference to
    Exhibit 10.2 to the Current Report on Form 8-K filed
    by Linn Energy, LLC on February 21, 2006)                                                                                                                                                                                                                        
|               | 10 | .14  |  |            |  | Stakeholders Agreement (incorporated herein by reference
    to Exhibit 10.4 to Form S-1)                                                                                                                                                                                                                                                                                                                                                                     
|               | 10 | .15 |  |            |  | Amended and Restated Employment Agreement, dated as of
    December 14, 2005 between Linn Operating, Inc. and
    Michael C. Linn (incorporated herein by reference to
    Exhibit 10.12 to Amendment No. 4)                                                                                                                                                                                                                                                   
|               | 10 | .16 |  |            |  | Second Amended and Restated Employment Agreement, dated as of
    September 15, 2005 between Linn Operating, Inc. and Kolja
    Rockov (incorporated herein by reference to Exhibit 10.12
    Amendment No. 2)                                                                                                                                                                                                                                                 
|               | 10 | .17  |  |            |  | Memorandum of Understanding Regarding Compensation Arrangements
    for Members of the Linn Energy, LLC Board of Directors
    (incorporated herein by reference to Exhibit 10.1 to the
    Current Report on Form 8-K filed by Linn Energy, LLC on
    February 21, 2006)                                                                                                                                                                                     
|               | 10 | .18 |  |            |  | Employment Agreement, dated effective as of April 3, 2006
    between Linn Operating, Inc. and Thomas A. Lopus
    (incorporation herein by reference to Exhibit 10.1 to the
    current Report on Form 8-K filed by Linn Energy, LLC on
    April 18, 2006 (the April 18, 2006
    Form 8-K)                                                                                                                                                                
|               | 10 | .19 |  |            |  | Linn Energy, LLC Long-Term Incentive Plan Restricted Unit
    Agreement, dated effective as of April 13, 2006 between
    Linn Energy, LLC and Thomas A. Lopus (incorporated herein
    by reference to Exhibit 10.2 to the April 18, 2006
    Form 8-K)                                                                                                                                                                                                       
|               | 10 | .20 |  |            |  | Linn Energy, LLC Long-Term Incentive Plan Option Agreement,
    dated effective as of April 13, 2006 between Linn Energy,
    LLC and Thomas A. Lopus (incorporated herein by reference
    to Exhibit 10.3 to the April 18, 2006 Form 8-K)                                                                                                                                                                                                                    
|               | 10 | .21 |  |            |  | Separation Agreement and General Release, dated effective as of
    April 7, 2006 between Linn Energy, LLC and its subsidiaries
    and Gerald Merriam (incorporated herein by reference to
    Exhibit 10.4 to the April 18, 2006 Form 8-K)                                                                                                                                                                                                                   
|               | 10 | .22  |  |            |  | Amended and Restated Credit Agreement dated as of April 7,
    2006 among Linn Energy, as borrower, BNP Paribas, as
    administration agent, Royal Bank of Canada and Societe Generale,
    as Syndication agents, Bank of America, N.A. and America Bank,
    as documentation agents, and lenders party thereto (incorporated
    herein by reference to Exhibit 10.1 to the Current Report
    on Form 8-K filed by Linn Energy, LLC on April 13,
    2006)
|               | 10 | .23* |  |            |  | First Amendment to Amended and Restated Credit Agreement among
    Linn Energy, LLC as Borrower, BNP Paribas, as Administrative
    Agent, and the Lenders signatory thereto, effective as of
    May 5, 2006                                                                                                                                                                                                                                                  
|               | 21 | .1*  |  |            |  | List of subsidiaries of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                                                                                                       
|               | 23 | .1*  |  |            |  | Consent of KPMG LLP for Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                                                                                                       
|               | 23 | .2*  |  |            |  | Consent of Schlumberger Data and Consulting Services                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 31 | .1*  |  |            |  | Rule 13a-14(a)/15d-14(a) Certification of Michael C. Linn,
    President and Chief Executive Officer of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                       
|               | 31 | .2*  |  |            |  | Rule 13a-14(a)/15d-14(a) Certification of Kolja Rockov,
    Executive Vice President and Chief Financial Officer of Linn
    Energy, LLC                                                                                                                                                                                                                                                                                                                       
|               | 32 | .1*  |  |            |  | Section 1350 Certification of Michael C. Linn, President
    and Chief Executive Officer of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                                   
|               | 32 | .2*  |  |            |  | Section 1350 Certification of Kolja Rockov, Executive Vice
    President and Chief Financial Officer of Linn Energy, LLC                                                                                                                                                                                                                                                                                                                                       






|  |                
|- | ---------------
|* | Filed herewith.



|  |                                                         
|- | --------------------------------------------------------
| | Management contract or compensatory plan or arrangement.